An Analysis of Energy Poverty in the Philippines

University of the Philippines Diliman
School of Economics
An Analysis of the Multidimensional Energy Poverty Index:
The Philippine Case
A thesis submitted
in partial fulfilment of the requirements for
Econ 199
Alyssa Mari G. Catanjal
Trexia Mae D. Lechoncito
27 May 2017
i
The Philippine Case
Alyssa Mari G. Catanjal and Trexia Mae D. Lechoncito
ABSTRACT
Despite the fact that there were studies that show that improving energy access contributes to
poverty alleviation, there have only been a few studies here in the Philippines that look at the status
of energy poverty. To this, we aim to introduce energy poverty in a multidimensional approach.
Through this approach, a more in-depth and targeted way can be made in order to assess the
situation and solve the problem at hand. We used the Household Energy Consumption Survey
(HECS) of 2004 and 2011 which has sufficient sample households to represent the Philippines.
Data from HECS include levels and patterns of energy consumption such as electricity access,
usage of modern energy sources, and ownership of recreational appliances. We adapted the Alkire-
Foster methodology in construction of the Multidimensional Energy Poverty Index (MEPI), which
captures both the incidence and intensity of energy poverty, to assess the extent of energy poverty
in the Philippines. Using this method, the results show that MEPI exhibits a significant reduction
from 0.611 to 0.552 in 2004 to 2011 as fueled by a large decrease both in the headcount and
intensity ratio. Moreover, the population of the MEPI-poor is heavily concentrated in the rural
areas and the Mindanao region particularly in ARMM, Zamboanga Peninsula, and
SOCCSKSARGEN where the use of traditional fuels for cooking is prevalent.
Keywords: poverty measure, poverty, energy sources, energy
JEL Classification: I32, Q40
ii
ACKNOWLEDGEMENTS
We would like to extend our heartfelt gratitude to our thesis adviser, Dr. Majah-Leah Ravago for
her infallible guidance and effort throughout the semester. We also want to thank Dr. Arsenio
Balisacan whose paper was used as the main model of this paper, and Dr. Gaurav Datt for
entrusting us a copy of his research that is pertinent to this study. This paper wouldn’t also be of
existence if it weren’t for the technical support Mr. Jan Carlo Punongbayan has provided us from
time to time, and for the feedback and assistance of Dr. Dennis Mapa, Dr. Karl Jandoc and Prof.
Manuel Leonard Albis. Furthermore, we want to thank Ms. Shirra de Guia of the Energy Policy
and Development Program (EPDP) and Mr. Alex Mañago of Philippine Statistical Authority
(PSA) for providing us with relevant data information, and the UPSE library and staff who guided
us in the pre-stages of this thesis.
To our family especially our parents, Felix and Amalia Lechoncito, and Maria Lourdes Catanjal,
we are very much grateful for your patience and understanding during the course of time when we
were doing our thesis. To our friends who showed undying support, we are thankful. Thank you
for instigating and encouraging us to finish the tasks at hand. To God be the glory!
iii
HONOR STATEMENT
We attest that this thesis we have submitted is our own. We have not cheated, plagiarized, nor
receive unauthorized assistance in the completion of this paper.
We have obtained the required prior consent for the use of the data for this research.
We understand that the University of the Philippines may impose commensurate sanctions and
penalties for instances of academic dishonesty committed in the completion of this paper.
Alyssa Mari G. Catanjal Trexia Mae D. Lechoncito
iv
WAIVER
Relevant portions of this work may be quoted and used for research and other scholarly purposes,
provided the proper citation is made.
Alyssa Mari G. Catanjal Trexia Mae D. Lechoncito
v
TABLE OF CONTENTS
CHAPTER 1: Introduction ………………………………………………..…….…..…….…… 1
CHAPTER 2: Trends of Energy Consumption …………………..………….……...………… 4
2.1. Trends of Energy Consumption in the Philippines ………………..……………... 4
2.2. Energy consumption in the Philippines vs. other Southeast Asian countries ….. 6
2.3. Perceptions on the Use of Common Household Energy Sources in the Philippines
…………………………………………………………………………............................. 8
CHAPTER 3: Review of Related Literature ………….………..…...….……..........................10
3.1. Definition of Energy Poverty …………………………………………………........10
3.2. Studies on Energy Access and Energy Poverty …………………………………...10
3.2.1. Studies that used Energy Access in the Philippines …………………… 11
3.2.2. Cross-country studies on Energy poverty ……………………………... 12
3.2.3. Empirical Studies using Alkire-Foster (AF) Model in the

Philippines …………………………………………………………..…………. 13
3.3. The Role of Energy Access ………………………………………………..…….… 14
CHAPTER 4: Existing Energy poverty metrics …………………………………...……........ 18
CHAPTER 5: Conceptual Framework ……………………………………………………..... 25
CHAPTER 6: Data and Empirical Approach ………………………………………...……... 29
6.1. Data ………………………………………………………………………………... 29
6.2. Summary Statistics ………………………………………….……………………. 30
6.3. Empirical Approach ………………………………………….…………………... 31
6.3.1. Multidimensional Energy Poverty Index (MEPI) ….…………………. 33
CHAPTER 7: Trends, Analysis, and Discussion of Results ………………………………... 39
7.1. Trends of MEPI Indicators …………………………….……………….…...…… 39
vi
7.1.1. By Urbanity …………………………………………….……………….. 39
7.1.2. By Region ………………………………………………..……………..... 40
7.1.3. By Industry Sector and Gender……………...……….…………..…….. 42
7.2. Results and Discussions ……………………………………….………………….. 42
CHAPTER 8: Conclusion and Policy Implications ……………………...……………………56
BIBLIOGRAPHY ……………………………………………………...…….……………….. 58
APPENDIX
A. Tabular Values of Data and Results …………………………….…...…………… 65
B. Stata Runs ………………………………….………………….…...……………… 75
B.1. MEPI Computation …………………………….…………………………75
B.2. Regression Results …………………………………..……………………. 78
B.3. Correlation Tests Results …………...………………..……………...….... 81
C. Documentation ………………………………………………..…………………… 84
vii
LIST OF TABLES
Table 2.1. Electricity access in Southeast Asia, 2013 ………………………..……......….…… 7

Table 2.2. Population relying on traditional biomass for cooking, 2013………….…....…..... 8
Table 3.1. Summary of Empirical Studies on Quantifying Energy Access in the Philippines
………………………………………………………………………………………………..…. 11
Table 3.2. Summary of Empirical Studies on Energy Poverty ……………..………………. 12
Table 3.3. Summary of Empirical Studies that used AF Model in the Philippines ……....... 14
Table 4.1. Dimensions, Indicators and Variables used for MEPI ……………………..……. 24
Table 6.1. Summary Statistics of Select Household Characteristics ……………..…………. 30
Table 6.2. Summary Statistics of Household’s Average Monthly Income (in cash and in kind;
2004 and 2011) …………………………………………………………………………………. 30
Table 6.3. Energy dimensions, 2004 and 2011 ……………………………………..…………. 31
Table 6.4. Description of dimensions, weights, and their cut-off points for computing MEPI
………………………………………………………………………………….…………….…. 34
Table 7.1. MEPI and its components H and A ……………………..……………………..….. 43
Table 7.2. Breakdown of MEPI into its dimensions ………………….…………………...…. 43
Table 7.3. Energy poverty profile by urbanity, 2004 and 2011 ………..………………….… 44
Table 7.4. Energy poverty profile by region, 2004 ………………………...…………………. 46
Table 7.5. Energy poverty profile by region, 2011 …………………………...………………. 47
Table 7.6. Tests for correlation results of MEPI ………………………………………........... 50
Table 7.7. Contribution of energy dimension to MPI, 2003 and 2012 ……………………… 53
Table 7.8. MEPI under different k values …………………………………………….…….... 55
viii
LIST OF FIGURES
Figure 1.1. Energy consumption per capita in Southeast Asia, 1990-2013 ………….………...1
Figure 1.2. ASEAN’s energy access and security in EAPI (2013-2017) ……………….……....2
Figure 2.1. Average energy consumption by sector in the Philippines (1998-2015) …….….. 4
Figure 2.2. Type of fuel used by households in the Philippines, 1989-2011 (in %) …………. 5
Figure 2.3. GDP per energy use (constant 2011 PPP $ per kg of oil equivalent) ..………….. 7
Figure 2.4. Perceptions of households on the use of common household energy sources, 2004
and 2011 ……………………………………………………………………………..................... 9
Figure 5.1. Energy poverty line ………………………………………………………………...26
Figure 5.2. Energy access multi-tier framework …………………………………………….. 27
Figure 5.3. Steps from energy availability to poverty reduction ………………………......... 28
Figure 7.1. Households Without Access to each MEPI indicators by urbanity, 2004 and 2011
……………………………………………………………..………………………...………….. 40
Figure 7.2. Households without access to each MEPI indicators by region, 2004 and 2011
…………………………………………………………………………………………..………. 41
Figure 7.3. Contribution of MEPI dimensions by urbanity, 2004 and 2011 …….……......... 45
Figure 7.4. Geographic Mapping of MEPI in the Philippines, 2004 & 2011 ……..…........... 49
Figure 7.5. Contribution of MEPI dimensions by region, 2004 and 2011 ………………….. 46
Figure 7.6. Comparison of MEPI, MPI, income headcount and poverty incidence by region,
2003-2004 and 2011-2012 ……………………..……………………………………………… 52
Figure 7.7. Trend of MEPI in different poverty cut-offs …………………...………...……... 55
ix
The Philippine Case
Alyssa Mari G. Catanjal and Trexia Mae D. Lechoncito
CHAPTER 1: Introduction
What is the extent of the energy poverty in the Philippines?
The energy consumption per capita in the Philippines, has often been cited as low compared
to other South East Asian countries (IEA, 2013) (see Figure 1.1). An index formulated by the
World Economic Forum (WEF) presents the value of energy architecture performance (EAP) per
country that is aligned with energy triangle-economic growth and development, environmental
stability, and energy access and security. WEF’s index shows that among the South East Asian
countries, Philippines has the lowest access to energy and energy security (see Figure 1.2). Despite
efforts from the Department of Energy (DOE) to improve the status of energization in the
Philippines, this problem still persists.
Figure 1.1 Energy consumption per capita in Southeast Asia, 1990-2013

9,000.00
kg of oil equivalent per capita
8,000.00
7,000.00
6,000.00
5,000.00
4,000.00
3,000.00
2,000.00
1,000.00
0.00
1990 2000 2010 2013
Source: World Development Indicators, World Bank

Note: No data for Lao PDR, and 1990 data for Cambodia
1
Figure 1.2 ASEAN’s energy access and security in EAPI (2013-2017)
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2013 2014 2015 2016 2017
Brunei Cambodia Indonesia Malaysia
Philippines Singapore Thailand Vietnam
Source: World Economic Forum

Note: No data for Lao PDR and Myanmar
The relationship of energy access to human development has been emphasized by
numerous studies (Kanagawa and Nakata, 2008; Sihag et al., 2004; Pokharel, 2007; Reiche et al.,
2000; and FAO, 2000). Access to energy is one of the most important factors in raising people out
of poverty in developing countries—highlighting the strong correlation between an increase in
energy access to poverty alleviation (Power for all, 2014). Specifically, the benefits of energy
access were further explained as one of the fundamentals in fulfilling basic social needs—paving
the way for improved health and education, better access to information, and enhanced household,
agricultural, and industrial productivity (Gaye, 2008). Likewise, the Food and Agriculture
Organization of the United Nations (FAO) (2000), posits that energy is an essential ingredient for
almost all human activities such as cooking, space/water heating, lighting, food preparation and
storage, and education.
2
With the improvement of health and welfare that energy access brings, more attention has
been paid into improving access to energy in every corner of the world, especially among
developing countries (IEA, 2014). However, despite the known importance that energy access
entails with eradicating poverty and, promoting economic and socio-economic development, there
have only been a few studies conducted in the Philippines that aims to address poverty by
improving energy access, and even studies that quantified energy poverty in the country.
One of the most common approaches that studies apply in quantifying energy access in the
Philippines is a binary approach—a method of identifying whether or not the household has access
to energy—and equating energy access to having access to electricity (ESMAP, 2002 and
Balisacan, 2001). This kind of approach only shows a narrow picture of the problem; failing to
take into account the multidimensional aspect of energy access.
Due to this gap among existing research, our main objective in writing this paper is to look
at the status of energy poverty in the Philippines by including the multidimensional nature of
energy access. We aim to provide insights on the significance of looking at the multidimensional
aspect of energy poverty, and its contribution to the overall poverty in the country. This is to better
identify the energy poor households, which could help in knowing the kind of solutions that will
effectively solve the problem.
3
CHAPTER 2: Trends of Energy Consumption
2.1. Trends of Energy Consumption in the Philippines
Lack of energy access does not only affect Philippine households but also the industries
that highly contribute to economic development. Data released by the Philippine Statistical
Authority (PSA) show that majority of the energy in the Philippines is being consumed by the
transport and the residential sectors (see Figure 2.1). The International Energy Agency (IEA)
(2004) highlights the importance of energy as a prerequisite for economic development, where the
reverse can also be said as true. Economic growth largely influences energy consumption
especially on the early stages of development, because as countries develop and living standards
improve, demand for energy grows much more rapidly (US Energy Information Administration,
2016). As energy access highly contributes to economic development, it is also the case that a
limited access to modern and affordable energy services contributes to the high poverty levels that
developing countries, particularly in sub-Saharan Africa and some parts of Asia, face (IEA, 2004).
This is also the case in the Philippines.
Figure 2.1 Average energy consumption by sector in the Philippines (1998-2015)
manufacturing mining construction

transport residential commercial
agri_fish_forest others
Source: Philippine Statistics Yearbook, 2009-2016
4
Aside from the energy consumption per sector in the Philippines, we explored the trends
in the types of fuel used by households using the final reports of the Household Energy
Consumption Survey (HECS)—a household based survey on usage of different energy sources.
This is important because the type of fuel used by households in the Philippines will be utilized in
the latter portion of this study. We also looked at the trends in the perceptions on the use of
common household energy sources.
As shown in Figure 2.2, electricity consistently displayed the highest proportion of
household usage with about 87.2% at the end of August 2011. The significant increase in electricity
usage from 64.6% to 83.9% in 1995 could be attributed to energy programs employed by the
government to hasten rural industrialization (NSO-DOE). In contrast, biomass residues posted an
all-time low percentage at 22.3% in 2011. This low usage in renewable sources of fuel is in parallel
to the shift in household’s preference to conventional types of fuel in 2004 where a 4.3 percentage
point decrease of charcoal usage and a substantial 10.5 percentage point reduction in biomass
residues usage was posted. Albeit the increase in usage of modern energy sources (electricity, LPG
and kerosene), fuelwood shows a meaningful 54.2% usage at the end of August 2011.
Figure 2.2 Type of fuel used by households in the Philippines, 1989-2011 (in %)
1989 1995 2004 2011

87.6
87.2
83.9
79.9
74.5
67.1
64.7
63.5
56.1
55.1
54.2
52.1
46.4
41.2
38.5
36.4
34.3
34.2
32.1
29.2
33
22.3
21.9
18.7
E LE C TR IC ITY LPG KEROSENE FUELWOOD CHARCOAL B IOM ASS

R E SIDUE S
Source of basic data: 1989 Energy Statistics, 1995, 2004, and 2011 HECS by NSO-DOE
5
In the use of traditional fuels, fuelwood used for cooking leads at 99.6% in 2004 and 99.8%
in 2011 followed consistently by charcoal at 88.1% in 2004 and 97% in 20111. Additionally, there
is an overall 22.5% decrease in the number of households without electricity access from 1989 to
2011. From 1995 to 2004, refrigeration, space cooling, and entertainment and education declined
significantly. Specifically, from 67.4% to 55.1% for refrigeration; from 49.6% to 25.4% for space
cooling, and from 19.4% to 10.2% for entertainment and education. Despite the meaningful
decrease from 1995 to 2004, a minimal increase from 2004 to 2011 is evident.2
2.2. Energy consumption in the Philippines vs. other Southeast Asian countries
An imbalance among the Southeast Asian countries exists when looking at the broader
perspective of energy poverty. Figure 1.1 of Chapter 1 shows the amount of energy consumption
per capita of Southeast Asian countries. Brunei Darussalam and Singapore show the highest
amount of energy consumption with 3,000 kg of oil equivalent (kgOE3) and above. This is
followed by Thailand and Malaysia with an energy consumption between 1,000 and 3,000 kgOE.
And the others with below 1000 kgOE, including the Philippines. However, despite the low energy
consumption per capita in the Philippines and Myanmar, their respective GDP per energy use
tended to increase (see Figure 2.3), highlighting the two countries’ effective use of energy.
Worldwide, an estimate of about 1.3 billion people lack access to electricity, while 2.6
billion still relies on traditional biomass stoves and open fires for cooking (REN21, 2013). This is
also a situation evident in the Southeast Asia, where 120 million lack access to electricity and 276
million people are still reliant on the usage of traditional biomass stoves. However, progress seems
to be evident as there had been a decrease in the number of people within the region who don’t
1
See Appendix Figure A.1.
2
See Appendix Figure A.2.
3
kgOE is the unit used as a common metric to quantify energy supplied using a variety of sources and carriers.
6
have access to electricity by two-thirds (IEA, 2015). Table 2.1 shows the status of electrification
within Southeast Asia, highlighting that the Philippines is third among the region, following
Myanmar and Cambodia, that has the highest number of shares of population (21%) who don’t
have access to electricity. Table 2.2 on the other hand, shows that 50% of the population in the
Philippines uses traditional biomass for cooking.
Figure 2.3 GDP per energy use (constant 2011 PPP $ per kg of oil equivalent)
18
16
14
12
10
8
6
4
2
0
1990 2000 2007 2008 2009 2010 2011 2012 2013 2014
Brunei Cambodia Indonesia
Malaysia Myanmar Philippines
Singapore Thailand Vietnam
Source: World Development Indicators, World Bank

Note: No data for Lao PDR, 1990 data for Cambodia, and 2014 data for Vietnam
Table 2.1 Electricity access in Southeast Asia, 2013

Population without Share of Electrification rate
Countries electricity (in population (%)
millions) (%)
Brunei Darussalam 0 0 100
Cambodia 10 66 34
Indonesia 49 20 80
Lao PDR 1 13 87
Malaysia 0 1 99
Myanmar 36 68 32
Philippines 21 21 79
Singapore 0 0 100
Thailand 1 1 99
Vietnam 3 3 97
Total Southeast Asia 120 19 81
Source: IEA, 2015
7
Table 2.2 Number of people relying on traditional biomass for cooking, 2013
Selected Asian Countries Number (in millions) Share of population (%)
India 772 66
Bangladesh 149 91
Indonesia 128 55
Pakistan 111 64
Philippines 47 50
Vietnam 49 56
All Developing Countries 2588 49
World 2588 38
Source: REN21, 2013
2.3. Perceptions on the Use of Common Household Energy Sources in the Philippines
To analyze the trends in the energy sector in the Philippines, especially the probable
reasons for the shift in the use of renewable energy sources to conventional energy sources, and
vice-versa, non-accessibility to electricity, and non-ownership of a refrigerating unit or
recreational appliances, we summarized the perceptions on the use of common household energy
sources using the HECS final report in 2004 and 2011.
As illustrated in Figure 2.4, the most probable factors considered in the use of common
household energy sources were mostly the prices associated with the installation of each, followed
by convenience. For kerosene and fuelwood, the cleanliness and environmental impact were
accounted for.
8
Figure 2.4 Perceptions of households on the use of common household energy sources, 2004
and 2011
Electricity LPG
Electric appliances are
Other fuels are better…
expensive
The monthly cost of LPG is convenient
electricity is expensive LPG is unsafe
The electricity installation
LPG is expensive
charge is expensive
Applying for an electrcity LPG equipment is…
installation is difficult LPG is hard to get/not…
0.0 50.0 100.0 0.0 50.0 100.0
Kerosene
Fuelwood
Kerosene is unsafe
Kerosene is convenient to… Fuelwood gathering is a…
Kerosene is dirty Cooking with fuelwood…
Kerosene is expensive Fuelwood gives hotter flame
Fuelwood is inconvenient…
Kerosene equipment is…
Fuelwood is dirty
Kerosene is difficult to get
Fulwood is expensive
0.0 50.0 100.0 Fuelwood is difficult to get
0.0 50.0 100.0
Source: Official Report of HECS (2004 & 2011) by NSO-DOE

Note: Category of electric appliances deemed expensive is not available in HECS 2011. And a household
may report more than one use of fuel.
9
CHAPTER 3: Review of Related Literature
3.1. Definition of Energy Poverty
Energy is very important as it has deeply influenced the lives of people all over the world,
most especially the poor. Due to its known importance, over time, numerous efforts have already
been exerted in trying to quantify energy poverty. However, studies which tried to measure energy
poverty solely focused on a household’s usage or consumption of energy devices.
Numerous studies have already tried to define energy poverty. Some define it as the state
of deprivation where the energy consumption of households barely meets the minimum energy
requirements for basic needs (Foster et al., 2000, Modi et al., 2006, OECD and IEA, 2010). The
World Economic Forum (2010) on the other hand, defines it as “the lack of access to sustainable
modern energy services and products.” UNDP (2013) also used the same definition. Others
however have defined an energy poor household as those who are not able to meet their basic
energy needs by estimating the minimum level of energy consumption needed (Parajuli, 2011,
Pereira et al., 2011). Furthermore, others have defined it as the ‘lack of access for modern energy
services’ (Li et al., 2014, IEA, 2014a). Some studies have also tried to quantify energy poverty
by using the expenditure or income parameters, which considers a household to be energy poor if
the household uses 10% of their income on energy (Barnes, 2010). But despite the numerous
amount of studies that have tried to define energy poverty, as of today, there is still no unified
definition for energy poverty (Bersisa, 2016).
3.2. Studies on Energy Access and Energy Poverty

In analysing the context of multidimensional energy poverty in the Philippines, we looked
at the different studies conducted in the country that used energy access as one of the components
of their analysis, as well as studies conducted in other countries that tried to quantify energy
10
poverty. We also explored the literature in the Philippines that used the Alkire-Foster Model,
which is the methodology that is applied in this paper.
3.2.1 Studies that used Energy Access in the Philippines
Table 3.1 displays a tabular summary of studies that quantified and used energy indicators
as one of their independent variables. All the studies that we’ve found uses a binary approach,
which pertains to a single variable that indicates whether or not a household is energy deprived or
not, in measuring energy access
Table 3.1 Summary of Empirical Studies on Quantifying Energy Access in the Philippines
Sources Year Approach Output Results
indicator(s)/Sample
Balisacan 2001 Binary Proportion of the rural Electricity access has a
Approach population living below minimal impact; roads have
the provincial poverty line the greatest impact.
ESMAP 2002 Binary Survey of approx. 28,000 Average incomes of home

Approach domestic, commercial, businesses using electricity
industrial and irrigation are significantly higher than
units with and without those who do not use
electricity electricity but no positive
impact of electrification on
incomes from agriculture
was found.
PIDS 2003 Binary Comparison of Compared to other ASEAN
Approach Philippines’ electrification countries, Philippines’ status
and energy usage rate to of electrification continues
other ASEAN countries to lag behind. This is despite
indicating higher electricity
production growth after the
economic crisis.
11
3.2.2 Cross-country studies on Energy poverty
In almost all corners of the world, numerous studies have already tried to quantify energy
poverty. Table 3.2 shows the different empirical studies among countries that have quantified
energy poverty through various approaches.
Table 3.2 Summary of Empirical Studies on Energy Poverty

Source Year Country Approach Results
Pachauri & 2004 India Two- Energy poverty is
Spreng dimensional/Engi- rapidly decreasing but
neering method inequality in the
distribution of energy
consumption and access
is increasing.
Barnes, et al. 2010 Bangladesh Minimum end-use 58% are energy poor
energy (MEE)
Nussbaumer, et al. 2011 Some MEPI Majority indicates a 0.9
African to 0.6 value of MEPI.
countries
Khandker, et al. 2012 India Demand based 41% are energy poor
despite being income
nonpoor.
Tchereni, et al. 2013 Malawi Energy expenditure More than 80% of the
households are below
the energy poverty line.
Edoumiekumo, et 2013 Nigeria MEPI 83.2% of the population
al. are energy poor.
Sher, et al. 2014 Pakistan MEPI 47% of the population

are energy poor.
Both in Bangladesh and India, energy poverty is measured through a demand approach. In
the demand approach, a minimum level of energy consumption needed to satisfy basic needs is set
where such energy consumption should be insensitive to the income of the household. Barnes, et
al. (2010) defined energy as the useful energy that households consume (end-use energy)4.
4
Actual energy that was made available and/or provided for by total energy used.
12
Khandker, et al. (2012) on the other hand, set an energy poverty line and have set it as the threshold
point where as income increases, energy consumption also increases. Energy poverty in this study
was defined as the level of energy consumption that the household absolutely needed to sustain
welfare.
Pachauri and Spreng (2004) measured energy poverty in India, by combining two different
approaches. First, is by estimating basic energy needs and consumption of households through an
engineering approach and certain normative assumptions. Second, by looking at poverty in relation
to the access of households to different energy sources by computing the energy expenditure in
proportion to its total expenditure. Pachauri and Spreng (2004) adopted a cut-off point of 10% of
total expenditure since it is most commonly mentioned as the level of expenditures for households
that are poor.
Tchereni, et al. (2013) on the other hand, used the expenditure approach to quantify energy
poverty where a household is energy poor if more than 10% of its income is allocated on energy
facilities (Fahmy, 2011). The studies conducted in Nigeria, Pakistan and other African countries
used Multidimensional Energy Poverty Index (MEPI) to measure energy poverty (Edoumiekumo,
et al., 2013; Sher, et al., 2014; Nussbaumer, et al., 2011). MEPI was constructed following Alkire-
Foster’s approach in measuring Multidimensional Poverty Index (MPI) where the headcount (H)
is multiplied to the average intensity of the dimensions identified in the index (A). Further
discussion on MEPI is elaborated in chapter 4 of this paper.
3.2.3 Empirical Studies using Alkire-Foster (AF) Model in the Philippines
In the Philippines, a plethora of studies had been conducted which employed the Alkire-
Foster methodology. However, majority of the studies that we’ve found only used the AF model
in quantifying poverty in a multidimensional nature, showing that was no study yet that used the
13
said model in quantifying energy poverty. Table 3.3 shows a tabular summary of some studies in
the Philippines that adapted the AF methodology.
Table 3.3 Summary of Empirical Studies that used AF Model in the Philippines
Sources Year Data and Topic Results

Sample Period
OPHI 2011 DHS (2008) Multidimensional Compared to other poverty
Poverty Index measures, MPI indicates a lower
(MPI) number of incidence/headcount
are poor in the Philippines.
Casimiro, 2013 DHS (1993- Multidimensional The parameters that the authors
et al. 2008) Approach to used are robust and that under-
Child Poverty five children are deprived in at
least two dimensions.
Balisacan 2015 FIES, NDHS, MPI “Aggregate poverty, seen from
APIS (1998- the lens of multidimensional
2012) deprivation, actually
declined as the economy
expanded during the past
decade.”
Datt 2016 APIS (2004- Multidimensional There is a significant decline in
2013) Poverty multidimensional poverty in the
Philippines compared to official
measures of poverty.
Albis and 2017 FIES-LF (2012), Employment Employment, the number of
Elviña CPH Barangay Correlates young and old dependents,
Schedule (2010 community public goods
contributes to MPI
3.3. The Role of Energy Access
In many of today’s global development challenges like poverty, inequality, climate change,
food security and even health and education, energy has always been a part of the central solution
in addressing such concerns (Nussbaumer, et al., 2011). Thus, one cannot deny the high importance
of energy into numerous different aspects- may it be for economic growth, poverty, human
development, health and education, and gender equality.
14
Impacts on Poverty and Household Income
Energy is recognised as one of the most essential inputs in sustaining people’s livelihood
which has led to new approaches that tried to include energy as a means for poverty alleviation
(Clancy, 2003). This theory paved way for several empirical studies that have tried to quantify if
whether an increase in electricity access could benefit the poor and help in increasing their income.
Fan et al. (2002) found in their study in China, that a positive relation between the amounts of
infrastructure investment in rural electrification and the number of poor reduced for every 10, 000
yuans invested in infrastructure exists. Fan et al. (2004) discovered a similar result in Thailand,
where among all the different public investments that they have identified, rural electrification has
the largest poverty reduction impacts. IEA (2004) adds that a limited access to modern and
affordable energy services much likely contributes to the high poverty levels that developing
countries, particularly in sub-Saharan Africa and some parts of Asia, face which can also be said
with the case of the Philippines.
Various empirical studies find that increasing electricity access contributes to poverty
reduction. However, despite this, some studies find otherwise. Fan et al. (1999) claims that an
additional government spending on rural electrification, has no discernible impact on decreasing
poverty in India. Balisacan (2001) also discovered the same thing, highlighting that electricity
access, although significant, it barely has an effect on reducing the proportion of the rural
population living below the official poverty line of the country.
In a micro perspective, ADB (2005) conducted a study in China, India and Thailand about
the impact of electricity access to the income of poor households. They found a negative
correlation exists between the degree of electricity access and income of poor households in
Thailand, and that a higher income inequality exists in electrified villages than in unelectrified
15
villages in India. They also discovered that in China, households in Shaanxi has a faster income
growth than the non-electrified poor households. However, they did not discover electricity to have
a positive impact on poverty level.
ADB (2010) concluded in their study in Bhutan that electricity access has a significant
effect on nonfarm income. ESMAP (2002) also found a similar finding in the Philippines, stating
that electrification has no positive impact on incomes sourced from agriculture. Khandker (2009a)
however, contradicted this result in her study in Vietnam where she concluded that grid
electrification has a strong influential increase in farm income and has hardly no effect for non-
farm income. Khandker (2009b) further supported Khandker’s (2009a) results in his study in
Bangladesh, highlighting that electricity access has a positive impact on both farm and non-farm
incomes. She adds that electricity’s positive effect on income is four times higher for wealthier
households than for poorer households.
Fan et al. (2005) overall, concluded that an access to electricity in Tanzania, significantly
increases household income in all economic zones. They approximated that a 1% increase in the
electrification rate would approximately lift 140,000 people out of poverty. Khandker (2009a)
further supported this claim, stating that grid electrification increases household income by at least
25%. UNDP (2011) also mentions that electricity access explains 30% of the increase in household
income in Nepal.
Impacts on Human Development
Energy is considered as an engine for socio-economic development (Nussbaumer, et al.
2013). It is believed that the standard of living and energy consumption are positively related with
one another, and the higher the standard of living for a certain country is, the higher the energy
16
consumption (Wu et al., 2010). However, there are only a few literatures that discuss the
relationship between human development index (HDI) and energy consumption.
Martinez and Ebenhack (2008) studied the correlation of HDI and energy consumption per
capita for 120 countries. They found a strong relationship between the index and energy
consumption for majority of the countries. They were also able to identify three important trends
based on the data: a steep rise in human development relative to energy consumption for energy-
poor nations; a moderate rise for transitioning nations; and no rise for developed nations
consuming large amounts of modern energy (Wu et al., 2010). Pasternak (2000) found a similar
finding using the 1997 data where he concluded that HDI and energy consumption per capita are
highly correlated with each other.
Ediger and Tathdil (2007) also supported the same findings when they recalculated the
weights of the 2000 HDI data for 173 countries by reintegrating energy as a component of the
index. They discovered severe differences after comparing the modified index to other energy-
related indicators provided in the UN Human Development Report of 2003.
17
CHAPTER 4: Existing Energy poverty metrics
Measuring energy poverty has started to become a focus among researchers. However, a
unified approach on how to quantify energy poverty is still inexistent. In the following, we present
different methods that are currently being used.
Binary Metrics Approach
The binary metrics approach highly focuses on a single dimension relying on only one
threshold of energy supply to assess if whether a household can be considered as energy poor. This
is measured more commonly by finding out whether a household have access to energy or not.
And although this kind of approach is easy to collect data for and interpret, this methodology only
presents a very narrow picture of energy access among households-failing to take into account the
multidimensional aspect of energy access (ESMAP, 2015).
Minimum Energy Consumption Threshold Approach/Energy Poverty Line
The concept of a poverty line has been one of the most relied on approach all over the
world. Whereby the methods of defining a poverty line are often based on an expenditure approach
where the minimum level of expenditure is set at which household can be considered as non-poor.
And likewise, this is also the same approach as to how energy poverty line is derived (Barnes et
al., 2010). An energy poverty line is defined as the threshold to quantify how much energy
consumption is needed to maintain a bare minimum livelihood for households (Barnes et al., 2010).
An approach in measuring energy poverty was adopted by Bravo et al. (1979) where he
considered the different variations in energy sources and their efficiencies, climate conditions, and,
urban and rural areas to quantify a household’s direct energy5 needs. Bravo et al., (1979) defined
5
Direct energy is defined as the usage of energy for cooking, lighting, heating/cooling, preservation of food, hot water,
ironing, pumping water, recreation and other social occasions. (Barnes, et al., 2005)
18
energy poverty line as the minimum quantity of energy needed by households to have a reasonable
quality of life. The method employed by Bravo et al., (1979) defined the average essential
household level for direct energy needs as 27.4 kgOE6 per capita per month.
Modi et al., (2005) defined energy poverty as the inability of the household to cook using
modern cooking fuels, as well as the inability to have a bare minimum amount of electric lighting
to do household and other productive activities. They have set the minimum amount needed to 50
kgOE7 per capita per year. This is based on the absolute minimum requirement of 40 kgOE for
cooking and 10kgOE for lighting. However, this kind of measure do not consider the energy
consumption used for agriculture, transport and other community-level needs like social services
and government activities (Modi et al., 2005). This kind of approach also fails to account market
conditions like prices and other energy policies that affect the delivery of energy services (Barnes
et al, 2010). Sanchez (2010) on the other hand, proposes a threshold level of 120 kilowatt-hours
(kWh) of electricity and the equivalent of 35 kilograms (kg) of LPG per capita per year.
Energy Expenditure Approach
A different approach in measuring energy poverty, as adopted by Pachauri and Spreng
(2004), used energy expenditure in proportion to the total expenditure of a household. The said
approach is applied as such because among different expenditure surveys, poor households tend
to use much of their income with expenses related to energy usage. So an increase in the
household’s total expenditure leads to a decrease in the household’s energy expenditure up until
they decrease it into a minimum level of 10% set as cut-off point by Pachauri and Spreng (2004).
6
Bravo et al., (1997) stated it as 9.2 thousand kcal/day/person which is then converted to as 27.4 kgOE per capita per
month.
7
kgOE is the unit used as a common metric to quantify energy supplied using a variety of sources and carriers.
19
Relatively, this kind of method has been considered to be easily administered in studies especially
in household surveys, as the official income or expenditure is readily available. However, this
approach assumes that income-poor or expenditure-poor are energy poor as well. But this is not
always the case (ADB, 2015).
Aside from the method applied by Pachauri and Spreng (2004), another study has also
applied the energy expenditure approach as a means to quantify energy poverty. Foster, et al.
(2000), have set an energy poverty line where those households that have a per capita energy
expenditure that is exactly or below the overall expenditure poverty line estimated for the country,
are the ones considered energy poor.
Energy Development Index (EDI)
Constructed by IEA in 2004, the primary aim of the Energy Development Index (EDI) is
to track a country’s progress in transitioning from the usage of traditional to modern fuel. The
index is measured through national data, composed of four indicators—commercial energy
consumption per capita, electricity consumption in the residential sector per capita, share of
modern fuels in total residential sector energy use, and share of population with access to electricity
(IEA, 2010). As the composite index makes use of a national data, EDI does not provide
disaggregated information about the degree of energy access, factors that impede access to energy,
and who are those mostly affected by the energy deficiency (ESMAP, 2015).
Multidimensional Energy Poverty Index (MEPI)
Efforts in trying to quantify energy access have started to gain attention especially since
the call of Sustainable Energy for All (SE4ALL) to achieve “universal access to modern energy
access by 2030.” However, quantifying energy access was faced with complications as there have
20
been no universal definition of energy access as well as measuring such definition in an accurate
manner (World Bank Group, 2014).
Initially, energy access was measured in a binary metric (‘access or no access’) approach
where a household is measured to have energy access if they have electricity and energy poor if
they don’t. And if whether they are cooking with solid or non-solid fuels. But this kind of approach
of measuring energy poverty is rather limited as it does not take into account the relevance of
energy access to industries and other community sectors like schools and hospitals.
Bourguignon and Chakravarty’s (2003) argument about poverty is that a single
dimensional approach defines poverty insensitively—failing to take in to account each dimension
of an individual’s well-being.8 This could also be applied in the context of energy poverty. This
drives the reason as to why Alkire and Foster (2009) argued that poverty should be looked at the
different dimension-specific cut-offs. However, due to the limitation that using dimensions-
specific cut-offs alone entails-failing to take a look across dimensions of poverty- Alkire and
Foster introduced a model that would try to aid in solving this problem.
Before, the methodology in trying to quantify energy poverty is through the unidimensional
approach where a minimum energy consumption threshold is set. If the energy consumption of a
household falls below this threshold, they are then considered as poor. From the perspective of the
capability approach, viewing multidimensional energy poverty through the lens of unidimensional
would then fail to take a look at relevant information of important dimension-specific shortfalls
(Alkire and Foster, 2009).
As the importance of identification method that focuses on dimensional shortfalls is
highlighted, as argued above, different criterions then popped out as to how to identify the poor.
8
See also Chakravarty et al 1998 and Tsui 2002 on this point.
21
One criterion that uses this type of identification is the union method of identification. This
identification often predicts a very high number result. This is because in this method, among all
the different dimensions of poverty, an individual is identified to be poor if s/he is deprived in any
one of the different dimensions (ci>1) (Alkire and Foster, 2009). As the number of dimension
increases, the union approach will often identify that majority of the population is poor, even if
some person that was said to be poor are not really considered as one. Some examples of literature
that used this approach are Charavarty, et al. (1998), Tsui (2002), Bourguignon & Chakravarty
(2003).
Another multidimensional identification method is the intersection approach. Opposite to
the union approach, the intersection approach identifies the poor if s/he is deprived in all of the
different dimensions of poverty (ci=d) (Alkire and Foster, 2009). And rather successfully, this
approach would accurately be able to identify the poor especially if the dimensions identified are
sufficient. And truthfully, in contrast to the union approach, this identifies a rather small amount
of number, focusing on the poorest of the poor. But this approach also inevitably misses out
identifying some people “who are experiencing extensive, but not universal, deprivation” (Alkire
and Foster, 2009).
Due to the limitations of the union and intersection approach, Alkire and Foster tries to
create a cut-off that could identify more accurately the poor, the dual-cutoff method. This method
uses an intermediate cut-off level for ci that lies in in between the extreme values of 1 and d. The
person identified as poor is then defined as those people whose number of deprivation falls above
or equal the cut-off k (ci≥k). And this is also the same approach that was employed by Nussbaumer,
et al. (2011) in identifying the multidimensionally poor.
22
The dual-cutoff measure entails characteristics that is one, ‘poverty focused’, in a sense
that an increase in the achievement level of an individual that is not poor leaves it unchanged. And
secondly, it is also ‘deprivation focused’ which means that a person’s poverty status is independent
of the changes in the levels of non-deprived achievements (Alkire and Foster, 2009).
The multidimensional approach using Multidimensional Energy Poverty Index (MEPI)
was developed by the Oxford Poverty and Human Development Initiative (OPHI) using the
foundations that was laid out by Alkire-Foster’s method of measuring Multidimensional Poverty
Index (MPI) (Nussbaumer, et al., 2011). Through the multidimensional approach, “access is
defined as the ability to obtain energy that is adequate, available when needed, reliable, of good
quality, affordable, legal, convenient, healthy, and safe for all required energy.” (World Bank
Group, 2014).
Fundamentally, MEPI “captures the set of energy deprivations that may affect a person”
(Nussbaumer, et al., 2011) whereby a person is considered to be energy poor if the combination of
the different deprivations experienced by the person exceeds a pre-defined threshold. MEPI
consists of five energy dimensions (i.e. cooking, lighting, appliances/services, communication,
education and entertainment) to represent basic energy needs using six indicators. In summary,
MEPI is the product of a headcount ratio (H) (share of people identified as energy poor) and the
average intensity of deprivation of the energy poor (A) (Nussbaumer, et al., 2011).
As used by OPHI, they have identified the different dimensions and indicators for MEPI
which are enumerated in Table 4.1.
23
Table 4.1 Dimensions, Indicators and Variables used for MEPI
Dimensions Indicators Weights Variables

Cooking Modern cooking fuel 0.20 Type of cooking fuel
Indoor pollution 0.20 Food cooked on stove

or open fire
Lighting Electricity access 0.20 Has access to
electricity
Household Appliances Household appliance 0.13 Has a fridge
ownership
Entertainment/education Entertainment/education 0.13 Has a radio or
appliance ownership television
Communication Telecommunication 0.13 Has a mobile phone or
means a land line phone
Source: Nussbaumer, et al., 2011 & 2013
24
CHAPTER 5: Conceptual Framework
People are living in poverty when the well-being that they experience is below the
minimum acceptable level (Schaffner, 2014). One measure in identifying the poor is through the
usage of a poverty line that represents the value of well-being indicators that marks the minimum
acceptable level.
Energy Poverty Line
Official poverty lines among different countries varies tremendously. Majority of the
developing countries define their poverty line in absolute terms, but vary as to how they define the
identified minimum acceptable levels of acceptable goods. Some developing countries, on the
other hand, define poverty lines in relative terms (Schaffner, 2014).
Just as how poverty lines are constructed and defined, we adopted Schaffner’s framework
to define an energy poverty line. People are identified as living in an absolute energy poverty
situation if they lack access to modern energy services like clean cooking fuels, modern stoves and
are deprived of using a reliable and efficient lighting, and even telecommunication services (IEA
et al., 2010). In contrast, people are identified as relatively energy poor if their access to modern
energy services are low compared to the typical level in their society (Schaffner, 2014).
Figure 5.1 illustrates how concepts like energy consumption gap, proportional energy
consumption gap, headcount ratio and so forth are determined through the energy poverty line.
The said figure also illustrates how energy poverty is determined through a minimum energy
consumption threshold. The figure shows energy consumption per capita in a person’s household
(Y), where the N individuals in a population is ordered from 1 to N with 1 being the poorest and N
being the richest. The person’s rank order (i) is used in the horizontal axis alongside with their
energy consumption (Yi) in the vertical axis. The average height of the figure represents the average
25
level of energy consumption per capita, while the slope is a representation of how energy
consumption rapidly rises as you move from the poorest to the richest individual.
Figure 5.1. Energy poverty line

Energy consumption (Y)
Source: Constructed by the authors as adopted from Schaffner (2014)
z in Figure 5.1 represents the minimum acceptable level of energy consumption per capita
where z touches the Y schedule at person index q, which represents that of the N number of
population, there are q people who are energy poor. The vertical distance of z-Yi represents person
i’s energy consumption gap where if divided to z, as in (z-Yi)/z, represents person i’s
proportional energy consumption gap. If this value is substituted to 0.30, it represents that the
person’s energy consumption falls 30% below the energy poverty line. The equation q/n on the
other hand represents the number of households in population whose energy consumption falls
below the energy poverty line or most commonly called as the headcount ratio. The shaded part
in Figure 5.1 represents the total amount of energy consumption needed to bring all energy poor
people above the energy poverty line or the total energy consumption gap.
26
Figure 5.2 on the other hand, outlines how overall energy access index is measured by
considering energy access among households, within production and even in the community.
However, for this study, we would mostly be focused on the construction of the index of
household’s access to energy since the unit of observation of our paper, is of the household level.
This will provide the foundation on the indicators that will be used in the construction of the
multidimensional energy poverty index or MEPI as deemed applicable to the context of the
Philippines and based on the variables available in the data of HECS. Aside from this, the number
of dimensions will serve as a way to identify properly the headcount ratio—a concept defined
previously in the section about energy poverty line—of those who are multidimensionally poor.
Figure 5.2. Energy access multi-tier framework
Source: ESMAP’s A New Multi-Tier Approach to Measuring Energy Access (2014)
Energy availability in reducing poverty
Figure 5.3. emphasizes the importance of adequate energy availability to poverty reduction,
where an increase in the energy availability could lead to an increase in energy consumption ceteris
paribus. This figure further highlights that an increase in energy access contributes to poverty
alleviation, which then increases welfare. Such an increase in energy consumption leads to changes
27
in socio-economic indicators like employment, and productivity that could then increase income
and GDP that would on the latter reduce poverty. However, it is important to note that energy
availability and energy consumption may be endogenous with one another, and thus requires
attention when being applied to the data.
Figure 5.3. Steps from energy availability to poverty reduction
Energy Availability (adequate

quality and quantity)
Energy consumption/use;
adoption of appliances
• Changes in enterprise/use of appliances; new

products/services; changes in quality,
productivity, cost of production, prices or
volumes of product, operating hours,
employment
• Creation of new enterprises
Changes in income, GDP

and other benefits
Poverty reduction
Source: From ESMAP’s The Impact of Electricity Access on Economic Development: A Literature Review
as adopted from Koojiman-van Dijk (2008)
28
CHAPTER 6: Data and Empirical Approach
6.1. Data
The primary source of data used in this study comes from the Household Energy
Consumption Survey (HECS), a household survey jointly conducted by the Department of Energy
(DOE) and Philippine Statistics Authority (PSA). HECS collects data on households’ usage of
different energy sources such as LPG, kerosene, etc., and where these sources are being used for
(i.e. cooking, lighting, ironing, etc.). The data set for 1989 and 1995 HECS were not available,
thus, the researchers only utilized the 2004 and 2011 data. HECS derived its sampling design from
the 2003 Master Sample (MS) for household-based surveys. It only used half of the households
(about 25,000 households) which are deemed to be sufficient to quantify the trends in energy
consumption in the national level. Thus, the sample households serve as a national representative
of the whole population with the application of the respective sampling weights of each year. The
total sample households for HECS 2004 is 21,960 while HECS 2011 has 20,591. Using a survey
data design, there were approximately 17.0 million households in the country in 2004 while, there
are about 21.0 million households in 2011. The energy sources mostly utilized in this study are
categorized to modern and traditional energy sources. With electricity, LPG and kerosene
comprising modern energy sources and charcoal, firewood, and biomass residues as traditional
energy sources.
The Family Income and Expenditure Survey (FIES) for the years 2003 and 2012 was also
used for constructing the multidimensional poverty index (MPI) which will be used for further
analysis of the results of MEPI. FIES is a household based nationwide survey conducted by the
National Statistics Office once every three years. The total sample households for FIES 2003 is
42,094 while FIES 2012 has 40,171.
29
6.2. Summary Statistics
Select Household Characteristics
Table 6.1 and 6.2 show select household characteristics only for the year 2011 due to
limitation of data in HECS 2004. Among the households that participated in the survey, 80.11%
are male-headed households, with an average age of 50.5 and an average family size of 5.
Table 6.1 Summary Statistics of Select Household Characteristics (n = 20, 591)
Variable Mean Std. Dev. Min Max

Male-headed HH (in %) 80.1 - 0 1
Female-headed HH (in %) 19.9 - 0 1
Age 50.534 13.892 15 98
Total Number of Household
Members 4.817 2.269 1 20
Source of basic data: HECS 2011
As in the case of income, both in cash and in kind, it is shown in Table 6.2 that in both
2004 and 2011, an average of 68% and 64%, respectively, of the respondents surveyed belong to
households with an income less than 10, 000. This group also consists majority of the respondents
who answered the survey followed by households with 10,000 to 29,999 income at about 26% in
2004 and 27% in 2011.
Table 6.2 Summary Statistics of Household’s Average Monthly Income (in cash and in
kind; 2004 and 2011)
Variable Mean Std. Dev

2004 2011 2004 2011
Less than 10,000 .681 .638 .466 .482
10,000 to 29,999 .258 .272 .438 .445
30,000 to 59,999 .047 .072 .212 .258
60,000 to 99,999 .010 .014 .099 .116
100,000 and over .005 .005 .067 .068
Source of basic data: HECS 2004 & 2011
30
As for the different dimensions of energy access we used, Table 6.3 displays an average of
14% of respondents do not have access to electricity both in 2004 and 2011. This is also the case
for indoor pollution, household appliance, space cooling, and entertainment and education where
they all showed a decrease in terms of the average percentage of household who do not have access
to these dimensions. In contrast, the percentage of household who uses traditional cooking fuels
increased from 45.6% to 55.8%.
Table 6.3 Energy dimensions, 2004 and 2011

Variable Name Variable Mean Std. Dev.
2004 2011 2004 2011

Modern Cooking modern_cook 0.456 0.558 0.498 0.497
Fuel
Indoor air pollution 0.741 0.435 0.438 0.496
pollution
Electricity light_elec 0.141 0.142 0.348 0.349
Access
Household ref 0.670 0.650 0.470 0.477
Appliance
Ownership
Space Cooling space_cool 0.470 0.410 0.499 0.492

Entertainment ent_own 0 .282 0.246 0.450 0.431
and Educational
Asset Ownership
Source of basic data: HECS 2004 and 2011
6.3. Empirical Approach
We employed the methodology of a Multidimensional Poverty Index (MPI) of Balisacan
(2015) and the Multidimensional Energy Poverty Index (MEPI) methodology of Bersisa (2016)
and Nussbaumer et.al (2011). Their methodologies were derived from the Oxford Poverty and
31
Human Development Initiative (OPHI) 9 as influenced by Amartya Sen’s argument “for the need
to focus on human poverty by considering the absence of opportunities and choices for living a
basic human life” (Nussbaumer, et al. 2011).
In the methodological approach of measuring multidimensional poverty, Balisacan (2015)
summarizes that the evaluation of multidimensional poverty pursues the same process as the
unidimensional approach. He elaborated that both methods involve defining appropriate indicators
that characterize the dimensions of deprivation, setting deprivation threshold/cut-offs linked to the
identified dimensions, and aggregating the individual information on the poor into a
comprehensive summary measure of poverty. In addition, he considers that a good
multidimensional poverty measurement must come with properties of decomposability and
flexibility. These attributes allow a further disaggregation of the index by subpopulation groups
(region, urbanity, sex, etc.) or by source of deprivation and utilization of “various types of
household survey data, particularly data involving a mix of ordinal (or categorical) and cardinal
indicators of household welfare” (Balisacan 2015).
This approach has been modified to fit the objectives of particular studies that used Alkire
and Foster’s (2011a) method in quantifying poverty.10 As for Bersisa (2016) and Nussbaumer et.al
(2011), a quantification of energy poverty was pursued to aid in policy creation and a more
efficient targeting of the poor to eradicate poverty.
Our analysis of energy poverty is based on the computed MEPI using the Alkire-Foster
Methodology utilized by the OPHI.
9
See works of Alkire and Foster (2007) and Alkire and Santos (2010)
10
See Casimiro, et al. (2013), Edoumiekumo, et al. (2013) and Nussbaumer, et al. (2012)
32
6.3.1 Multidimensional Energy Poverty Index (MEPI)
MEPI is now becoming one of the most common approaches used by researchers to
quantify energy poverty while at the same time taking into account its multidimensional nature.
MEPI considers both the incidence and intensity of energy poverty among households. It follows
the OPHI methodology using the identification and aggregation approaches of Alkire and Foster
(2011a) in constructing the MPI.
Balisacan’s (2015) methodology of MPI and Bersisa (2016) and Nussbaumer et al.’s (2011)
methodology of MEPI are applied in this analysis. However, due to the limitations in our data,
telecommunication means as measured by ownership of a landline or mobile phone are not
considered. Nonetheless, space cooling as measured by ownership of an electric fan/air
conditioning unit is added with accordance to ESMAP’s energy access framework. However,
unlike in Fig. 5.2. of the conceptual framework, the dimension for water heating is not included
for its insignificance in the Philippine context. Given the flexibility of the AF methodology, the
dimensions, indicators, weights, and deprivation cut-offs are selected in accordance with the
objectives of quantifying energy poverty. These are provided in a tabular summary in Table 6.4.
33
Table 6.4 Description of dimensions, weights, and their cut-off points for computing MEPI
Dimension Indicator Variables Weights Deprivation Cut-off

(Poor if…)
Modern Type of cooking 0.20 Household uses

cooking fuel fuel traditional source/s of
energy for cooking
(fuelwood, charcoal)
Cooking Indoor air Type of cooking 0.20 Household uses non-
pollution appliance efficient stove or
appliances such as gas
range. rice cooker,
pressure cooker
Lighting Electricity Has access to 0.20 Household does not
access electricity have access to
electricity
Services Household Has a fridge 0.13 Household does not

provided appliance have a fridge
by means ownership
of Has an electric 0.13 Household does not
household fan or air- have an electric fan or
appliances conditioning air-conditioning
appliances appliance.
Entertainment & Entertainment Has a radio, tap, 0.13 Household has none of
Education or educational TV or computer these assets
appliance
ownership
The index is modified depending on the limitations of the data in HECS, years 2004 and
2011. The index of multidimensional energy poverty is composed of four dimensions, with six
corresponding indicators which include “commonly demanded household energy services”
(Nussbaumer et al. 2011).
Since cooking is a vital activity for the sustenance of life, we included the type of fuel used
by a household in cooking to be able to capture the elements of energy poverty in the use of
traditional fuels such as fuelwood, charcoal, and biomass residues that accord with opportunity
34
cost as compared to modern forms of fuel like LPG, kerosene, and electricity. This is shown in
some studies as majority of women and children use most of their time for daily chores particularly
in collecting fuel for cooking thus losing valuable time for leisure and other meaningful activities
(Nussbaumer et al. 2011; Bersisa 2016).
In the Philippines, some households in the regions still practice the use of traditional forms
of fuel in cooking. As reported in HECS 2011 final report, about 54% use fuelwood as a source of
fuel for cooking while placing third and fourth is the use of charcoal and biomass residues at 35.3%
and 20.1%, respectively.
Additionally, under cooking, indoor air pollution was added to account for households that
use non-efficient cooking appliances. Evidently, females experience direct exposure to this
pollution as they are perceived to do most of the household chores particularly cooking. Thus, we
want to consider the impact of indoor air pollution to health as a significant contributor to energy
poverty in the households.
We also added the space cooling dimension which is in contrast with how Nussbaumer, et
al. (2011) composed their indicators when they constructed the Multidimensional Energy Poverty
Index (MEPI). We added this dimension due to its relevance to the tropic characteristic of the
Philippines.
In accordance with Nussbaumer, et al., (2011) selection of energy access indicators, we
adapted other indicators such as access to electricity and ownership of appliances. Notably,
electricity provides numerous developmental benefits, and is most commonly used for lighting.
Additionally, other services such as entertainment and education are all added to the dimensions
of MEPI as they are also contingent with the usage of electricity. Hence, we added indicators
related to appliances such as fridge, television, radio and computer/printer to be able to take into
35
account the end-use aspect, as it is most commonly not included in energy access metrics. With
the usage of the aforementioned indicators, the element of affordability where the financial means
of households to pay for fuel and other appliances, as well as their benefits to socio-economic
development, are all being taken into consideration.
Applying Nussbaumer and his colleagues’ (2011) methodology, multidimensional energy
poverty was quantified in six indicators of regularly utilized household energy services. The vector
Y={yij} depicts the n×d matrix of achievements for I households across j indicators., thus a value
of yij>0 represents household i’s achievement in the indicator j. We also specify a vector zj that
represents the deprivation cut-offs which are conditions to be met in indicator j such as if yij = 1
then a household is considered not deprived. Then, a column vector denoted by ci is defined as the
weighted deprivation count of a person. Additionally, a poverty cut-off denoted by k is set such as
if ci > k then a household is censored as non- deprived (Nussbaumer et al., 2011).
As for the weights in the fourth column of Table 6.4, we adapted the weights applied by
Nussbaumer et al. (2011 & 2013) to put greater emphasis on cooking, indoor air pollution, and
electricity access. These indicators are shown to be significant energy services as compared to
household appliance ownership and ownership of entertainment or educational devices in the
Philippines. The A-F methodology is divided into two: identification and aggregation.
The identification phase uses a dual cut-off approach which is comprised of the deprivation
cut-off and poverty cut-off. The deprivation cut-off denoted by zj is the minimum acceptable level
of energy consumption as adapted in Schaffner (2014)’s conceptual framework which determines
the energy poor people and provides an estimate of the headcount ratio and total energy access
gap. The cut-offs were determined as per the availability of a certain variable to a household and
36
the poverty cut-off denoted by k used was 0.30 as used by Balisacan (2015) and Nussbaumer et al.
(2011).
The aggregation phase involves the computation of the MEPI as the product of the energy
poverty headcount ratio and the energy poverty intensity (Alkire and Foster, 2011).
MEPI as per Alkire-Foster Model is represented as:
MEPI = H x A (1)
H = incidence/ headcount of multidimensional energy poverty
A = intensity of multidimensional energy poverty
Decomposing the MEPI we have the energy poverty headcount (H) and the energy poverty
intensity (A). As shown in equation (2), the energy poverty headcount accounts for the average
headcount ratio for a household that has a weighted deprivation count (ci) greater than 0.3 (k).
Energy Poverty Headcount:

𝑞
1
H = ∑ 𝑐𝑖 > 𝑘 (2)
𝑁
𝑖=1
k = energy poverty line
ci = number of people who are energy poor or has a deprivation score higher than the cut-
off point/ energy poverty line (k)
N = total number of households
37
As shown in equation (3), the energy poverty intensity is the depth of energy poverty
experienced by a household. It is measured as the average of the censored weighted deprivation
counts with a denominator of the total number of people who are energy poor.
Energy Poverty Intensity:
∑𝑞𝑖=1 𝑐𝑖 (𝑘) (3)

A= ⁄ 𝑞
∑𝑖=1 𝑐𝑖
∑𝑞𝑖=1 𝑐𝑖 (𝑘) = average of the censored weighted deprivation counts
∑𝑞𝑖=1 𝑐𝑖 = total number of people who are energy poor
38
CHAPTER 7: Trends, Analysis, and Discussion of Results
7.1. Trends of MEPI Indicators
The indicators used in the construction of the MEPI were analysed with the aid of HECS
2004 and 2011. We explore the trends by geographical location and sectors to observe
developments in terms of their access to electricity, cooking fuel used, ownership of a refrigerating
unit and ownership of educational and entertainment appliances.
7.1.1. By Urbanity
As shown in Figure 7.1. households located in rural areas are consistently energy deprived
in all dimensions with about 64% and 70% in 2004 and 2011 under the use of modern cooking
fuels. Households in urban areas posted a lower percentage of households who don’t have access
to electricity at roughly 5% in 2004 and 6% in 2011 compared to those in the rural areas where at
about 22% and 20% of the households surveyed are deprived of electricity.
Overall, there is a trend of decreasing number of households without access to electricity,
without space cooling appliances, refrigerator, and no ownership of educational and entertainment
appliances. Meanwhile, the share of households using traditional cooking fuels increased from
2004 to 2011 for both areas.
39
Figure 7.1. Households without access to each MEPI indicators by urbanity, 2004 and 2011
(in %)
100
Urban Rural
80
Percentage
60
40
20
0
2004 2011 2004 2011
Cooking Lighting Refrigerating unit Space Cooling Entertainment and Education
7.1.2. By Region
As shown in Figure 7.2., ARMM consistently displayed the highest percentage value of
deprived households in all indicators where almost 95% do not have a refrigerating unit in their
homes in 2004. This is followed by Zamboanga del Sur and CAR, with roughly 74% of households
deprived of traditional cooking fuels, and 81% are without space cooling devices in 2004 for CAR.
Meanwhile, NCR posted the lowest percentage of energy deprivation in all indicators. Followed
by CALABARZON and Central Luzon in most of the indicators with approximately 6% and 5%
in no access to electricity in 2004, correspondingly. In totality, there is an average decreasing trend
from 2004 to 2011 in households without access to electricity, no space cooling appliances,
refrigerator, and no ownership of educational and entertainment appliances. On the other hand, the
use of traditional cooking fuels such as fuelwood and charcoal showed an increasing trend.
40
Figure 7.2. Households without access to each MEPI indicators by region, 2004 and 2011
2004
100
90
80
70
Percentage
60
50
40
30
20
10
0
I II III IVA IVB V VI VII VIII IX X XI XII NCR CAR ARMM XIII
2011
100
90
80
70
Percentage
60
50
40
30
20
10
0
I II III IVA IVB V VI VII VIII IX X XI XII NCR CAR ARMM XIII
Cooking Lighting Refrigerating unit Space Cooling Entertainment and Education

41
7.1.3. By Industry Sector and Gender
The agriculture and fishery sectors are the most deprived in all the indicators with the use
of traditional fuels in cooking yielding the most percentage points. Meanwhile, the finance sector
displays the lowest percentage at 0% with no access to electricity (see Appendix Figure A.3.).
By gender of the household head, the male population posts significant values for all the
indicators vis-a-vis the female population. This trend could be characterized by the significant
number of male headed households with 80.11% vis-a-vis 19.89% female headed households.
Furthermore, access to electricity, entertainment, and education displays minimal discrepancy
between the male and the female whereas services, cooking, and space cooling have a gap of more
than 6% points (see Appendix Figure A.4.).
7.2. Results and Discussions
In this section, the results and analysis for the computed indices H, A, and MEPI are
presented. Furthermore, spatial statistical analysis was implemented to aid in displaying the
different characteristics of MEPI by region.
Multidimensional Energy Poverty Index Results
Table 7.1 summarizes the results of MEPI in 2004 and 2011, and its components--
headcount ratio and average intensity. It highlights a decrease in MEPI from 0.385 in 2004 to 0.327
in 2011 which means that 32.7% of the population is energy deprived of the total potential
deprivations possible in 2011. This decline was caused mainly by the large fall in the headcount
and intensity ratios which is reflective of the efforts of the government to increase rural
electrification rate and provide a stable and reliable power supply among regions 11. The average
11
See Philippine Energy Plans of DOE and Philippine Development Plans of NEDA
42
energy poor household is energy deprived in 63.0% of the weighted indicators in 2004 and 59.3%
in 2011.
Table 7.1 MEPI and its components H and A
Multidimensional Energy Average Intensity of Multidimensional

HECS Poverty Headcount Ratio Multidimensional Energy Poverty Index
(H) Energy Poverty (A) (MEPI)
2004 0.611 0.630 0.385
2011 0.552 0.593 0.327
Note: Poverty cut-off is k=30%
Unpacking the index, we are able to decompose the relative contribution of each dimension
to overall MEPI. Table 7.2 displays that cooking and services provided by household appliances
contribute the most to energy poverty with 48.52% and 34.73% in 2011, respectively. This was
followed by lighting, entertainment, and education with minimal contributions at 8.49% in 2004
and 8.91% in 2011, which could be attributed to the increased efforts of the government to extend
the electrification rate of the country.
Table 7.2 Breakdown of MEPI into its dimensions
Dimension and Contribution to MEPI (%)

Service
provided
Entertainment
HECS Cooking Lighting by means of Total
and Education
Household
Appliances
2004 51.73 6.43 33.35 8.49 100.00
2011 48.52 7.84 34.73 8.91 100.00
We further employ the decomposability feature of MEPI to show the distribution by those
who are considered MEPI poor in terms of geographic area (region & urbanity). We provide a
43
comprehensive profile of the population, headcount ratio, average intensity, and MEPI across
geographic areas for the years 2004 and 2011.
Amidst, the slight difference in the share of population of both communities, Table 7.3
shows that rural households still comprised the highest percent contribution at about 71.10% in
2004 and 74.79% in 2011 in total MEPI. While a 3.69% reduction was posted in the contribution
of the MEPI-poor in urban areas, from 2004 to 2011. This can be attributed to the significant
decline in both MEPI headcount and intensity. As shown in Figure 2.4, convenience and price
were top considerations in a household’s preference of a household of energy source to use. Thus,
rural households stand on a disadvantage due to their financial incapability and geographic
location.
Table 7.3 Energy poverty profile by urbanity, 2004 and 2011

Average
Multidimensional Intensity of Multidimensional
Population Energy Poverty Multidimen- Energy Poverty
Urbanity Headcount (H) sional Energy Index (MEPI)
Poverty (A)
Number Contrib. Ratio Contrib. Ratio Ratio Contrib.
(in
millions)
Urban
2004 8.45 49.81 43.81 35.69 0.51 22.34 28.90
2011 9.15 43.65 35.99 28.48 0.52 18.89 25.21
Rural
2004 8.52 50.19 78.34 64.31 0.70 54.53 71.10
2011 11.82 56.35 70.02 71.52 0.62 43.41 74.79
Note: All figures in % except for population
Figure 7.3 accounts for the relative contribution of each energy dimension by urbanity. It
illustrates that the percent contribution of cooking is shown to be significant in 2004 and 2011.
Albeit, a decrease in MEPI headcount is shown for both communities in Table 7.3, there is a posted
significant increase in the use of traditional cooking fuels as shown in Figure 7.3.
44
Figure 7.3. Contribution of MEPI dimensions by urbanity, 2004 and 2011
80.00
Headcount (%) Urban Rural
60.00
40.00
20.00
0.00
2004 2011 2004 2011
Cooking Lighting Services Entertainment and Education

Note: Values are in terms of percent (%). See Appendix (Table A.1) for values.
Regionally, Table 7.4 and Table 7.5 show a consistent trend of MEPI poor that is
concentrated mostly in ARMM, Zamboanga Peninsula, SOCCSKSARGEN and MIMAROPA.
ARMM posts the highest MEPI at 70.8% in 2004 and 62.84% in 2011 which World Bank (2013)
suggests to be caused by the political instability in the region particularly, the “the struggle of the
Moro groups for self-determination, communist insurgencies, and banditry.” Albeit this, ARMM
only contributes 5.6% to energy poverty in the Philippines vis-a-vis Western Visayas which has
the highest contribution at 51.24%.
Figure 7.4 shows the geographic mapping of MEPI in the Philippines during 2004 and
2011. The shades indicate the concentration of energy poverty in the country—the darker the shade
is, the higher the value of MEPI for that region. The figure illustrates the change of energy poverty
in the Philippines especially in the region of Mindanao and Visayas. In contrast, NCR, Central
Luzon, and CALABARZON consistently ranked the lowest MEPI results in both years due to their
geographical advantage—investments are easily deployed in these regions unlike in Mindanao.
Moreover, the cooking dimension has a consistent trend of having the highest percentage share
through all the regions (see Figure 7.5).
45
Table 7.4 Energy poverty profile by region, 2004
Average
Multidimensional Intensity Multidimensional
Population Energy Poverty of Multidi- Energy Poverty
Region Headcount (H) mensional Index (MEPI)
Energy
Poverty
(A)
(in
millions)
NCR 2.36 13.9 28.19 6.41 0.39 10.90 3.94
CAR 0.29 1.68 71.74 1.97 0.60 43.22 1.89
Ilocos Region 0.89 5.27 59.29 5.11 0.58 34.57 4.73
Cagayan Valley 0.60 3.54 68.80 3.98 0.63 43.18 3.97
Central Luzon 1.87 11.02 52.06 9.38 0.48 24.99 7.15
CALABARZON 2.30 13.54 44.66 9.89 0.52 23.30 8.20
MIMAROPA 0.52 3.04 79.12 3.93 0.72 57.19 4.52
Bicol Region 0.97 5.69 74.76 6.96 0.68 50.50 7.47
Western Visayas 1.29 7.59 77.03 9.56 0.67 51.24 10.10
Central Visayas 1.25 7.36 72.20 8.69 0.67 48.12 9.20
Eastern Visayas 0.77 4.53 75.25 5.58 0.72 54.31 6.39
Zamboanga
0.60 3.55 79.65 4.62 0.75 60.09 5.54
Peninsula
Northern Mindanao 0.76 4.47 69.69 5.10 0.67 46.93 5.45
Davao Region 0.83 4.91 67.68 5.44 0.70 47.25 6.03
SOCCSKSARGEN 0.73 4.33 78.83 5.58 0.73 57.28 6.44
ARMM 0.52 3.08 93.86 4.73 0.75 70.80 5.67
Caraga Region 0.42 2.5 74.97 3.07 0.68 51.09 3.32
Philippines 16.97 100 0.611 100.00 0.63 0.385 100.00

Note: All figures in % except for population
46
Table 7.5 Energy poverty profile by region, 2011
Average
Multidimensional Intensity Multidimensional
Population Energy Poverty of Multidi- Energy Poverty
Region Headcount (H) mensional Index (MEPI)
Energy
Poverty
(A)
(in
millions)
NCR 2.72 12.96 18.34 4.31 0.43 7.91 3.13
CAR 0.38 1.79 57.37 1.86 0.59 34.12 1.87
Ilocos Region 1.17 5.59 49.39 5.00 0.53 25.95 4.43
Cagayan Valley 0.78 3.71 61.22 4.12 0.54 33.17 3.76
Central Luzon 2.30 10.97 39.71 7.90 0.49 19.64 6.59
CALABARZON 2.76 13.17 37.20 8.88 0.54 19.94 8.03
MIMAROPA 0.69 3.28 79.29 4.72 0.64 50.62 5.08
Bicol Region 1.19 5.67 74.14 7.62 0.63 46.34 8.03
Western Visayas 1.68 8.01 72.27 10.49 0.58 41.74 10.22
Central Visayas 1.56 7.43 65.42 8.82 0.64 41.57 9.45
Eastern Visayas 0.97 4.61 71.10 5.94 0.62 43.84 6.18
Zamboanga
0.76 3.61 77.50 5.07 0.67 51.90 5.73
Peninsula
Northern Mindanao 0.94 4.50 69.25 5.65 0.62 42.75 5.89
Davao Region 1.01 4.80 66.00 5.75 0.63 41.44 6.09
SOCCSKSARGEN 0.93 4.42 76.04 6.09 0.66 50.46 6.82
ARMM 0.61 2.89 87.78 4.59 0.72 62.84 5.54
Caraga Region 0.54 2.58 68.19 3.19 0.59 40.03 3.16
Philippines 20.97 100.00 0.55 100.00 0.59 0.33 100.00

Notes: All figures in % except for population.
47
Figure 7.4. Geographic Mapping of MEPI in the Philippines, 2004 & 2011
48
Figure 7.5. Contribution of MEPI dimensions by region, 2004 and 2011
2004 2011
Caraga
Soccsksargen
Davao Region
ARMM
Mimaropa
Northern Mindanao
Western Visayas
Zamboanga Peninsula
Central Visayas
Bicol Region
Eastern Visayas
Ilocos Region
CAR
Cagayan Valley
Calabarzon
Central Luzon
NCR
45 40 30 25 25 30 35
20 15 10 5 0 0 0 5 10 15 20
Cooking Lighting Services Entertainment and Education

Note: Values are in terms of percent (%). See Appendix (Table A.2) for values.
The gender and industry sector were also considered despite the limitation in sources of
data. The results show that male-headed households have a higher MEPI value compared to
households that are female-headed. For the industries, fishery and agriculture sectors have the
highest value. However, as this is not the focus of our study, we will not be dwelling much about
this sector. The results that we have found are in the appendix (Table A.3). The contribution of the
MEPI dimensions to gender and the industry sector, are also in the appendix (Tables A.4 and A.5)
where it shows that consistently, the use of traditional fuels for cooking hold majority of the share
for both sectors.
Correlation Tests and Regression Results
To test for the validity of our results, we conducted an OLS regression and a multinomial
logistic regression to further evaluate the values of our index where a relative use of MEPI 2004
with MPI, poverty incidence 2003 was used as data. This is also the case for MEPI 2011 and MPI,
49
poverty incidence 2012. The OLS regression results show that a higher MEPI value (i.e. more
energy poor) leads to a higher poverty incidence level, same with MPI. On the other hand, the
multinomial logistic regression shows that as the income category of households increase, the
probability of having a high MEPI value decreases relative to the highest income category. The
regression results are found in the appendix (Section B.2).
Aside from conducting regression, we also performed relative correlation tests with MPI
and poverty incidence for further evaluation of our MEPI values. The Pearson coefficient of
correlation, Spearman’s rank correlation coefficient, and the Kendall rank correlation coefficient
were used based on the satisfaction of the assumptions on the variables of interest. The results vary
between +1 and -1 in which a variable with a value close or equal to 1 is associated with a high
degree of correlation. Table 7.6 shows a summary of the results of the relative correlation tests that
we employed. The values generated from Spearman’s and Kendall are significant at all
conventional levels, while the result from Pearson correlation emanates a 5% significance level.
They posit a positive correlation with MEPI, which implies that a higher level of MEPI is
associated with higher levels of MPI and poverty incidence. In reference to Cohen’s (1988)
guidelines, the Pearson coefficients emanate a medium strength correlation at 0.404 for MPI and
0.417 for poverty incidence in 2011. Given these results, we then compare MEPI, MPI, and poverty
incidence more specifically.
Table 7.6 Tests for correlation results of MEPI

Spearman’s Rank
Pearson Correlation Kendall Rank Correlation
Correlation
Variable
2004 2011 2004 2011 2004 2011
Name
MPI 0.436* 0.404* 0.433 0.419 0.285 0.272
Poverty
0.417* 0.408* 0.405 0.405 0.266 0.263
Incidence
Note: *values are in terms of 0.05 significance level; all the rest are significant at all levels.
50
Comparison of MEPI with other poverty measures
Figure 7.6 compares and shows the value of poverty in terms of MEPI (as computed
above), multidimensional poverty index (MPI), income headcount and poverty incidence for the
years 2003 to 2004 and 2011 to 2012. The values of MPI and income headcount are computed by
using FIES dataset for 2003 and 2012, following Balisacan’s weights allocation and methodology.
The graph shows that consistently, ARMM shows the highest ratio for MEPI and MPI and income
headcount in 2011-2012 at an average of 67%. This was consistently followed by Zamboanga
Peninsula at 51.90% and 23.54% for MEPI and MPI of 2011-2012. But for the poverty incidence,
ARMM was followed by Eastern Visayas where 45.2% of the population are below the poverty
threshold of the region during 2012. Zamboanga Peninsula only came in as the region with the 6th
highest number of percentage in terms of the poverty incidence.
One can also see that MEPI and MPI moves in the same direction, on the other hand
however, income headcount and poverty incidence sometimes show a different movement for both
years. This further shows the high discrepancy between the numbers generated through the
unidimensional approach (poverty threshold) in comparison to the multidimensional approach
(MPI).
For further analysis, the MPI of Balisacan (2015) was deconstructed by tweaking the
standard of living dimension to account for the contribution of energy to the overall MPI (see Table
7.7). The “Energy” dimension was created accounts for electricity access, utilization of modern
energy sources and ownership of recreational appliances. The reconstructed table with modified
indicators and weights is found in the appendix Table A.8. Moreover, the Family Income and
Expenditures Survey (FIES) for 2003 and 2012 were utilized for the said computations to allow
relative comparison for MEPI 2004 and 2011 computed using HECS. The key results in running
the reconstructed MPI report that the energy dimension shows a minimal contribution to the overall
51
poverty at about 32.76% for 2003 and 37.86% for 2012, in the Philippines. Surprisingly, energy
dimension’s contribution to MPI is highest in Ilocos Region followed by Cagayan Valley and
CALABARZON if FIES is used. This is relatively different with the findings of MEPI using HECS
2011 where areas in Mindanao comprise the most contribution to the MEPI of the Philippines. It
is important to note that MEPI contribution is computed by looking at which region/urbanity
contributes the most to the MEPI of the Philippines compared to the energy contribution column
where it looks at the influence of the energy dimension to the overall MPI in terms of region.
Figure 7.6. Comparison of MEPI, MPI, income headcount and poverty incidence by region,
2003-2004 and 2011-2012
2003 - 2004
MEPI MPI Income Headcount Poverty Incidence
80.00
70.00
PERCENTAGE
60.00
50.00
40.00
30.00
20.00
10.00
0.00
2011 -2012
MEPI MPI Income Headcount Poverty Incidence
70.00
60.00
PERCENTAGE
50.00
40.00
30.00
20.00
10.00
0.00
Source of basic data: HECS 2004 & 2011 for MEPI, FIES 2003 & 2012 for MPI and Income Headcount,
Philippine Statistics Yearbook 2016 for Poverty Incidence
Note: 2003 &2012 MPI & Income Headcount, and 2004 & 2011 MEPI are based on author’s
computation. See Tables A.6 and A.7 for values.
52
Table 7.7 Contribution of energy dimension to MPI, 2003 and 2012
Subgroup Health Education Standard of living Energy MEPI
Urbanity 2003 2012 2003 2012 2003 2012 2003 2012 2004 2011
Urban 17.84 21.44 8.74 13.84 40.26 24.66 33.16 40.05 28.90 25.21
Rural 21.38 26.89 10.23 12.50 34.00 23.49 34.39 37.13 71.10 74.79
Region
NCR 12.41 16.49 20.35 17.56 39.68 25.44 27.56 40.51 3.94 3.13
CAR 20.94 27.23 12.98 13.33 32.06 21.02 34.02 38.42 1.89 1.87
Ilocos Region 21.44 22.78 9.49 7.49 36.14 25.42 32.93 44.31 4.73 4.43
Cagayan Valley 18.34 20.93 11.61 11.91 35.58 24.46 34.47 42.70 3.97 3.76
Central Luzon 19.84 21.00 13.88 14.44 36.82 22.87 29.46 41.69 7.15 6.59
Calabarzon 20.01 20.53 12.55 12.88 36.75 24.81 30.69 41.78 8.20 8.03
Mimaropa 20.04 26.80 11.33 13.96 34.51 24.00 34.12 35.24 4.52 5.08
Bicol Region 23.08 28.34 9.73 11.26 34.05 24.03 33.14 36.36 7.47 8.03
Western Visayas 21.52 24.81 11.16 10.57 33.75 25.82 33.57 38.80 10.10 10.22
Central Visayas 24.08 25.74 12.03 11.85 31.83 24.14 32.05 38.26 9.20 9.45
Eastern Visayas 20.88 29.05 13.18 14.08 33.18 23.87 32.76 32.99 6.39 6.18
Zamboanga Peninsula 23.37 25.16 12.04 13.75 32.20 23.94 32.39 37.15 5.54 5.73
Northern Mindanao 23.35 27.85 12.77 12.72 30.41 21.70 33.48 37.73 5.45 5.89
Davao Region 20.86 25.20 14.43 14.16 31.73 23.33 32.98 37.31 6.03 6.09
Soccsksargen 20.94 26.96 11.58 13.43 33.40 23.49 34.09 36.12 6.44 6.82
ARMM 22.32 31.01 9.68 13.99 33.49 21.37 34.52 33.63 5.66 5.54
Caraga Region 21.46 25.27 12.37 14.12 32.89 22.95 33.27 37.67 3.32 3.16
Philippines 21.46 25.52 12.05 12.84 33.73 23.78 32.76 37.86 100.00 100.00
Source of basic data: FIES 2003 and FIES 2012 for MPI; HECS 2004 and 2011 for MEPI
Notes: MPI based on author’s computation and energy indicators were removed in standard of living as MPI derived from Balisacan (2015). See
Appendix (Table A.8) for the weights and indicators used by the authors for this computation.
53
Table 7.8 shows the trend of varying energy poverty cut-off (k) values to MEPI, average
energy poverty intensity (A) and energy poverty headcount (H). As seen in the tabular summary
below, as the k value increases, MEPI and H display a decreasing trend while A exhibits a
proportional increasing trend. This verifies that as more dimensions are taken into account, the
depth (A) of energy poverty intensifies and the number people deprived (H) drop. The results
indicate that the overall energy headcount has an average decrease of 8% relative to the reduction
in average energy intensity of 2.1%. Overall, MEPI decreased by an average of 6.2%.
Table 7.8 MEPI under different k values

Multidimensional Energy Poverty Indexes
MEPI A H
k 2004 2011 2004 k 2004 2011
0.1 0.428 0.365 0.508 0.1 0.428 0.365
0.2 0.418 0.348 0.542 0.2 0.418 0.348
0.3 0.385 0.327 0.630 0.3 0.385 0.327
0.4 0.339 0.281 0.717 0.4 0.339 0.281
0.5 0.308 0.234 0.762 0.5 0.308 0.234
0.6 0.274 0.203 0.804 0.6 0.274 0.203
0.7 0.182 0.143 0.906 0.7 0.182 0.143
Figure 7.7 illustrates the test of first-order dominance for the MEPI. This tests for the
robustness of the change in poverty in a per period basis. Non-intersecting lines represent
robustness of results in a particular poverty cut-off. The graph shows plausible results as they pass
the robustness tests at all poverty cut-offs.
54
Figure 7.7. Trend of MEPI in different poverty cut-offs
45%
MEPI ( Adjusted Headcount)

40%
35%
30%
25%
20%
15%
10%
5%
0%
0 0.2 0.4 0.6 0.8
Poverty cutoff k
HECS 2004 HECS 2011
55
CHAPTER 8: Conclusion and Policy Implications
This study shows the extent of energy poverty in the Philippines through the
Multidimensional Energy Poverty Index (MEPI). We found that energy poverty in a
multidimensional lens exhibit a decreasing trend as fuelled by significant reduction in the depth
and breadth of energy poverty. Furthermore, the use of fuelwood as a major source for cooking
supported the findings of this research as for the dominance in the use of traditional fuels for
cooking which further aggravates index. Furthermore, effects of the rural energy programs started
in 1995 were not yet felt as energy poverty has still been reported as a rural phenomenon and the
contribution of having no electricity access surged above 1% in 2011. MEPI-poor are concentrated
in the areas of Mindanao specifically, ARMM, Zamboanga Peninsula, SOCCSKSARGEN and
MIMAROPA, while NCR, followed closely by Central Luzon, yields the lowest percent
contribution to overall MEPI. Male-headed households are also deemed to be more MEPI-poor
than the female-headed households and that a portion of energy poverty came largely from the
agriculture and fishery sector which involves low-skilled and low-paying occupations. Thus, this
ponders the need for further electrification programs and off-grid expansions to rural villages.
Herrin (1979) discovered that rural electrification along with other social and economic
developments bring about changes in consumption and investment patterns of rural households.
Additionally, Chakravorty et. al. (2016) shows that rural electrification raises agricultural income
and has significant short term benefits for regions in low income nations such as the Philippines.
Given the following results obtained through this research, this study may serve as an
impetus to strengthen efforts in providing modern energy services such as electricity, LPG and
kerosene, to regions that highly exhibits energy poverty as obtained through MEPI such as in
ARMM, Zamboanga Peninsula, and SOCCSKSARGEN. Partnerships and regular dialogues to
56
key stakeholders such as the electric power industry participants, and LGUs can also be established
to facilitate policy recommendations and program developments. Continuous work on policies can
also be done to attract private capital in power generation, and ease up the procedures in obtaining
permits and licenses among investors. Furthermore, stronger efforts in conducting studies that
would further provide knowledge about the importance of energy access to welfare development
and poverty reduction such as the Household Energy Consumption Survey (HECS) can also be
conducted, and use this as a foundation in laying out effective energy policies and programs.
We also encourage further research about the state of energy poverty in the Philippines
using a different approach of measuring energy poverty and/or through using a different source of
data to be able to analyse the status of energy poverty in a different perspective. We recommend
future researchers to also look upon the different determinants of MEPI and how it may affect the
macroeconomy (i.e. economic growth, poverty) by employing different economic regression
models using MEPI as an independent variable.
57
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64
APPENDIX
A. Tabular Values of Data and Results

Figure A.1. Percent of households using traditional fuel by end-use
Fuelwood Charcoal Biomass Residues
99.8
99.6
90.1
88.1
97
85.9
67.2
63.4
30.7
27.6
37
25.9
23.4
16.6
11.2
10.5
8.7
6.7
4.9
3.8
3.5
1989 1995 2004 2011 1995 2004 2011
C OOKING WATE R HE ATING
Notes: Data for water heating for 1989 is unavailable. A household may be counted for more than one
under each type of fuel and end-use.
Figure A.2. Households deprived by end-use and electricity access (in %)

Refrigeration Space Cooling Entertainment and Education Electricity Access
67.4
58.62
55.1
49.6
35.3
27.61
25.4
19.4
16.1
11.81
12.8
12.4
10.2
0
0
0
1989 1995 2004 2011

DE PR IVE D
Notes: Data for refrigeration, space cooling and entertainment and education for 1989 is unavailable.
Entertainment and education deprivation is indicated as a proxy for recreational activities deprivation.
*A household may be counted for more than one under each type of fuel and end-use.
65
Figure A.3. Households deprived of MEPI indicators by industry sector, 2011
100
Percentage 80
60
40
20
0
Electricity Access Modern Cooking Sources

Services Space Cooling
Entertainment and Education
Figure A.4. Households deprived of MEPI indicators by gender, 2011
80
60
Percentage
40
20
0
Male Female
Electricity Access Modern Cooking Sources Services
Space Cooling Entertainment and Education

Table A.1 Energy poverty contribution per dimensions by urbanity
Service provided
by means of Entertainment and
Community Cooking Lighting
Household Education
Type
Appliances
Urban
2004 9.72 2.02 14.72 9.41
2011 14.69 2.43 11.73 8.31
Rural
2004 21.86 7.17 14.13 29.76
2011 24.33 6.60 12.49 29.47
Note: All values are in percent (%).
66
Table A.2 Energy poverty contribution per dimensions by region (2004 & 2011)
Regions Cooking Lighting Services Entertainment

Provided by and Education
Means of
Household
Appliances
2004 2011 2004 2011 2004 2011 2004 2011

NCR 6.06 8.70 0.18 1.79 3.91 2.36 0.75 2.89
CAR 20.26 16.47 2.49 2.97 16.56 14.99 3.91 3.69
Ilocos Region 18.01 18.57 2.34 1.75 11.68 12.66 2.53 2.29
Cagayan Valley 20.45 18.07 3.69 2.08 14.90 12.84 4.13 2.58
Central Luzon 13.40 13.54 1.21 1.09 8.83 8.85 1.55 1.56
Calabarzon 12.58 11.07 0.95 4.10 8.03 5.54 1.73 6.74
MIMAROPA 27.95 21.11 4.16 8.35 18.31 10.25 6.77 14.51
Bicol Region 27.02 24.28 2.81 3.82 16.41 15.89 4.26 4.33
Western Visayas 28.84 24.02 2.92 3.08 16.38 16.66 3.10 3.85
Central Visayas 25.58 22.89 3.08 3.97 16.11 15.71 3.35 4.23
Eastern Visayas 26.92 22.81 4.19 3.01 17.75 15.33 5.45 4.39
Zamboanga Peninsula 30.00 24.41 5.32 6.01 19.33 19.33 5.44 6.15
Northern Mindanao 23.40 23.81 3.51 4.13 16.02 18.28 4.00 4.41
Davao Region 24.57 23.07 2.67 5.04 15.20 18.02 4.81 5.34
SOCCSKSARGEN 29.59 26.97 4.09 4.89 17.79 17.40 5.82 4.84
ARMM 31.35 25.10 6.88 7.83 23.89 21.06 8.67 7.21
Caraga Region 25.34 22.78 4.00 3.93 17.35 20.10 4.39 5.04
67
Table A.3 Energy poverty profile by gender & industry sector, 2011
Average
Multidimensional Intensity of Multidimensional
Population Energy Poverty Multidimen- Energy Poverty
Sector Headcount (H) sional Energy Index (MEPI)
Poverty (A)
(in
millions)
Gender*
Male 16.69 79.59 56.95 82.16 37.55 33.88 82.45
Female 4.28 20.41 48.21 17.84 32.40 28.12 17.55
Industry*
Agriculture 5.57 26.56 83.22 40.07 56.87 55.00 44.67
Fishery 0.90 4.29 86.94 6.76 59.92 58.06 7.62
Mining 0.12 0.55 74.90 0.75 53.45 49.88 0.84
Manufacturing 1.12 5.34 42.77 4.14 27.23 22.40 3.65
Utilities 0.07 0.35 17.97 0.11 16.71 11.57 0.12
Construction 1.49 7.12 56.36 7.28 34.55 30.08 6.55
Trade 2.09 9.95 37.31 6.73 24.03 18.94 5.76
Transportation
1.90 9.04 43.74 7.17 27.29 22.22 6.14
and ICT
Finance 0.11 0.52 14.21 0.13 11.53 5.73 0.09
Services 3.17 15.12 37.16 10.18 23.73 18.91 8.74
Unemployed 4.43 21.15 43.48 16.67 28.57 24.44 15.80
55.17 100.00 59.29 32.71 100.00
Philippines 20.97 100
Notes: All figures in % except for population.
*Gender and industry sector of household head is available only for HECS 2011.
68
Table A.4 Energy poverty contribution per dimensions by business sector, 2011
Services
Provided by
Business Sector Cooking Lighting Means of Entertainment
Household and Education
Appliances
Agriculture 39.24 9.16 29.82 8.73
Fishery 38.49 7.51 28.24 8.98
Mining 31.26 8.81 26.59 8.25
Manufacturing 28.50 2.59 20.71 4.56
Utilities 23.53 3.59 13.54 3.08
Construction 22.58 2.19 15.61 3.10
Trade 23.00 1.63 15.17 2.97
Transportation and ICT 20.00 1.67 13.25 2.39
Finance 25.68 0.00 10.90 0.58
Services 9.49 0.88 6.30 1.31
Unemployed 7.28 0.82 4.92 1.18
Table A.5 Energy poverty contribution per dimensions by gender, 2011
Services
Provided by
Means of
Household Entertainment
Gender Cooking Lighting Appliances and Education
Male 16.42 2.71 11.77 2.99
Female 13.74 2.01 9.77 2.61
69
Table A.6 Comparison of MEPI, MPI, income headcount and poverty incidence by region, 2003-2004
HECS 2004 FIES 2003 FIES 2003 PSA 2003

Multidimensional
Multidimensional
Energy Poverty Income Headcount Official Poverty Measure
Poverty Index (MPI)
Index (MEPI)
Annual Per Poverty
Capita Poverty incidence
Contrib. Contrib. Contrib.
Region Ratio Ratio Ratio Threshold (in Among
(%) (%) (%)
Pesos) Population (%)
NCR 10.90 3.94 4.42 3.15 3.32 1.77 16,737 6.90
CAR 43.22 1.89 18.54 1.71 23.03 1.59 14,033 32.20
Ilocos Region 34.57 4.73 12.38 3.44 23.49 4.87 13,281 30.20
Cagayan Valley 43.18 3.97 15.50 2.79 19.71 2.65 11,417 24.50
Central Luzon 24.99 7.15 8.69 5.09 12.53 5.48 14,378 17.50
Calabarzon 23.30 8.20 9.69 6.68 12.88 6.63 14,720 18.40
MIMAROPA 57.19 4.52 28.21 4.54 36.76 4.42 12,402 48.10
Bicol Region 50.50 7.47 27.55 8.85 46.04 11.03 12,379 48.50
Western Visayas 51.24 10.10 25.73 10.37 30.95 9.31 12,291 39.20
Central Visayas 48.12 9.20 25.59 9.98 37.23 10.83 9,805 28.30
Eastern Visayas 54.31 6.39 30.56 7.68 38.50 7.22 10,804 43.00
Zamboanga Peninsula 60.09 5.54 36.00 6.82 46.92 6.63 10,407 49.20
Northern Mindanao 46.93 5.45 24.00 5.71 38.87 6.90 11,605 44.00
Davao Region 47.25 6.03 23.07 5.99 30.75 5.96 11,399 34.70
SOCCSKSARGEN 57.28 6.44 26.66 6.13 34.29 5.89 11,328 38.40
ARMM 70.80 5.66 43.60 7.52 33.41 4.30 12,733 52.80
Caraga Region 51.09 3.32 25.80 3.54 44.20 4.52 11,996 54.00
Philippines 38.49 100.00 18.90 100.00 25.32 100.00 12,309 30.00
Note: FIES 2003 MPI is based on the authors’ computation, and the official poverty measure was derived from the Philippine Statistics Yearbook
(2016).
70
Table A.7 Comparison of MEPI and MPI, income headcount and poverty incidence by region, 2011-2012
HECS 2011 FIES 2012 FIES 2012 PSA 2012
Multidimensional
Multidimensional
Energy Poverty Index Income Headcount Official Poverty Measure
Poverty Index (MPI)
(MEPI)
Annual Per Poverty
Capita incidence
Contrib. Contrib. Contrib. Poverty Among
Region Ratio Ratio Ratio
(%) (%) (%) Threshold Population (%)
(in Pesos)
NCR 7.91 3.13 2.71 2.63 5.33 2.57 20,344 3.90
CAR 34.12 1.87 11.86 1.60 20.52 1.37 19,483 22.80
Ilocos Region 25.95 4.43 6.26 2.45 20.15 3.91 18,373 18.50
Cagayan Valley 33.17 3.76 8.64 2.30 17.62 2.33 19,125 22.10
Central Luzon 19.64 6.59 5.65 4.82 14.55 6.15 20,071 12.90
Calabarzon 19.94 8.03 5.64 6.06 12.43 6.63 19,137 10.90
MIMAROPA 50.62 5.08 21.20 4.93 33.03 3.81 17,292 31.00
Bicol Region 46.34 8.03 19.03 8.69 44.15 10.00 18,257 41.10
Western Visayas 41.74 10.22 16.24 9.59 29.11 8.52 18,029 29.10
Central Visayas 41.57 9.45 15.76 9.00 35.71 10.11 18,767 30.20
Eastern Visayas 43.84 6.18 20.36 6.98 44.73 7.60 18,076 45.20
Zamboanga Peninsula 51.90 5.73 23.54 6.81 37.27 5.35 18,054 40.10
Northern Mindanao 42.75 5.89 16.58 6.08 39.38 7.17 19,335 39.50
Davao Region 41.44 6.09 15.76 5.96 29.87 5.60 19,967 30.70
SOCCSKSARGEN 50.46 6.82 22.52 7.85 43.88 7.59 18,737 44.70
ARMM 62.84 5.54 40.11 10.97 54.32 7.37 20,517 55.80
Caraga Region 40.03 3.16 16.11 3.29 38.91 3.95 19,629 40.30
Philippines 32.71 100.00 12.91 100 26.04 100% 18,935 25.20
Note: FIES 2012 MPI is based on author’s computation, and the official poverty measure was derived from the Philippine Statistics Yearbook
(2016).
71
Figure A.5 Geographic Mapping of MPI in the Philippines, 2003 & 2012
2003 2012
72
Figure A.6 Geographic Mapping of Poverty Incidence in the Philippines, 2003 & 2012
2003 2012
73
Table A.8 Description of modified dimensions, weights, and their cut-off points for
computing MPI
Dimension Indicator Weights Deprivation Cut-off (Poor if…)
Child mortality 1/16 household does not use flush toilet
Sanitation
Drinking 1/16 household does not have access to safe drinking

Health
Water water
Malnutrition 1/8 household is food poor

Food Poverty
Years of 1/41 no household member has completed six years of
Education schooling schooling.
Shelter household’s roof is composed of light/ salvaged

1/24
Roof material
Wall household’s wall is composed of light/ salvaged

1/24 material
Standard of
Mobility
Living household does not own a vehicle
Ownership of
1/12
vehicle
household’s other sources of income are less than
Other sources of 20% of total income
income 1/12
Electricity 1/16 household does not have access to electricity
Modern Energy 1/16 household uses modern energy
HH Appliance 1/32 household has an air conditioning unit

Ownership
Energy (Space Cooling &
Refrigerator 1/32 household has a refrigerating unit
Ownership)
Entertainment 1/16 household has either a personal computer or radio or

and Education both
74
B. Stata Runs
B.1 MEPI Computation
B.1.1 Philippines
2004
Headcount (H)
Average Intensity (A)
75
Multidimensional Energy Poverty Index (MEPI)
. gen mepi=deprive*sumf
2011
. svyset [pw=popwgt]
pweight: popwgt
VCE: linearized
Single unit: missing
Strata 1: <one>
SU 1: <observations>
FPC 1: <zero>
Headcount (H)
Average Intensity (A)
76
MEPI
. gen mepi=deprive*sumf
B.1.2 By Region
svyset [pw=popwgt]
svy: mean deprive, over (reg)
svy: mean sumf if deprive==1, over (reg)
Svy: mean mepi, over (reg)
B.1.3.Industry Sector
svyset [pw=popwgt]
svy: mean deprive, over (dbusiness)
svy: mean sumf if deprive==1, over (dbusiness)
Svy: mean mepi, over (dbusiness)
B.1.4 Gender
svyset [pw=popwgt]
svy: mean deprive, over (headsex)
svy: mean sumf if deprive==1, over (headsex)
Svy: mean mepi, over (headsex)
77
B.2 Regression Results
2004
OLS Regression
. regress pov_inc mepi mpi
Source SS df MS Number of obs = 21960

F( 2, 21957) =53356.79
Model 3724417.65 2 1862208.82 Prob > F = 0.0000
Residual 766322.701 21957 34.9010657 R-squared = 0.8294
Adj R-squared = 0.8293
Total 4490740.35 21959 204.505686 Root MSE = 5.9077
pov_inc Coef. Std. Err. t P>|t| [95% Conf. Interval]
mepi .9702335 .1230217 7.89 0.000 .7291022 1.211365

mpi 1.248595 .0042997 290.39 0.000 1.240168 1.257023
_cons 6.509978 .0895167 72.72 0.000 6.334519 6.685437
Diagnostic Tests
VIF - Test for Multicollinearity
. vif
Variable VIF 1/VIF
mepi 1.24 0.809540

mpi 1.24 0.809540
Mean VIF 1.24
Breusch-Pagan test for heteroskedasticity

. estat hettest
Breusch-Pagan / Cook-Weisberg test for heteroskedasticity

Ho: Constant variance
Variables: fitted values of pov_inc
chi2(1) = 1623.52
Prob > chi2 = 0.0000
78
OLS Regression with White’s Robust Standard Error
. regress pov_inc mepi mpi, robust
Linear regression Number of obs = 21960

F( 2, 21957) =55208.43
Prob > F = 0.0000
R-squared = 0.8294
Root MSE = 5.9077
Robust
mepi .9702335 .1257849 7.71 0.000 .7236861 1.216781

mpi 1.248595 .0042987 290.46 0.000 1.24017 1.257021
_cons 6.509978 .0733188 88.79 0.000 6.366268 6.653688
Ramsey RESET
. estat ovtest, rhs
Ramsey RESET test using powers of the independent variables

Ho: model has no omitted variables
F(6, 21951) = 1123.60
Prob > F = 0.0000
2011
OLS Regression
. regress pov_inc mepi mpi
Source SS df MS Number of obs = 20591

F( 2, 20588) =67475.87
Model 3720424.11 2 1860212.05 Prob > F = 0.0000
Residual 567581.379 20588 27.5685535 R-squared = 0.8676
Adj R-squared = 0.8676
Total 4288005.49 20590 208.256702 Root MSE = 5.2506
mepi 1.620471 .11617 13.95 0.000 1.392769 1.848173

mpi 1.54967 .0046922 330.26 0.000 1.540473 1.558867
_cons 5.021384 .0710631 70.66 0.000 4.882095 5.160674
79
Diagnostic Tests
VIF Test for Multicollinearity

. vif
Variable VIF 1/VIF
mepi 1.19 0.837223

mpi 1.19 0.837223
Mean VIF 1.19
Breusch-Pagan Test for Heteroscedasticity

. estat hettest
Breusch-Pagan / Cook-Weisberg test for heteroskedasticity

Ho: Constant variance
Variables: fitted values of pov_inc
chi2(1) = 6016.72
Prob > chi2 = 0.0000
OLS Regression with White’s Robust Standard Error

. regress pov_inc mepi mpi, robust
Linear regression Number of obs = 20591

F( 2, 20588) =27355.20
Prob > F = 0.0000
R-squared = 0.8676
Root MSE = 5.2506
Robust
mepi 1.620471 .1181774 13.71 0.000 1.388834 1.852108

mpi 1.54967 .0074207 208.83 0.000 1.535125 1.564215
_cons 5.021384 .0832953 60.28 0.000 4.858119 5.18465
Ramsey RESET
. estat ovtest, rhs
Ramsey RESET test using powers of the independent variables

Ho: model has no omitted variables
F(6, 20582) = 3154.17
Prob > F = 0.0000
80
Multinomial Logistic Regression
. mlogit income mepi mpi pov_inc, baseoutcome (5)
Iteration 0: log likelihood = -18811.021

Multinomial logistic regression Number of obs = 20591

LR chi2(12) = 5555.08
Prob > chi2 = 0.0000
Log likelihood = -16033.479 Pseudo R2 = 0.1477
income Coef. Std. Err. z P>|z| [95% Conf. Interval]
Less_than_10_000
mepi 10.01881 1.617299 6.19 0.000 6.84896 13.18866
mpi -.2099127 .0422691 -4.97 0.000 -.2927587 -.1270667
pov_inc .1277527 .0252789 5.05 0.000 .0782071 .1772984
_cons 3.177927 .1677073 18.95 0.000 2.849227 3.506627
10_000_to_29_999
mepi 6.645693 1.617477 4.11 0.000 3.475495 9.81589
mpi -.1553998 .0422295 -3.68 0.000 -.2381681 -.0726314
pov_inc .0988872 .0252663 3.91 0.000 .0493661 .1484084
_cons 3.362128 .1674106 20.08 0.000 3.03401 3.690247
30_000_to_59_999
mepi 5.02759 1.622542 3.10 0.002 1.847465 8.207715
mpi -.0817469 .0428 -1.91 0.056 -.1656333 .0021395
pov_inc .059356 .025642 2.31 0.021 .0090986 .1096133
_cons 2.256063 .171851 13.13 0.000 1.919241 2.592885
60_000_to_99_999
mepi 3.031418 1.681195 1.80 0.071 -.2636648 6.3265
mpi -.0286496 .046204 -0.62 0.535 -.1192078 .0619085
pov_inc .0344875 .0279151 1.24 0.217 -.0202251 .0892
_cons .6446359 .1964966 3.28 0.001 .2595096 1.029762
100_000_and_over (base outcome)
B.3 Correlation Tests Results

B.3.1 Pearson Product Moment Correlation
2004
. pwcorr mepi mpi pov_inc, star (0.05)
mepi mpi pov_inc
mepi 1.0000
mpi 0.4364* 1.0000
pov_inc 0.4171* 0.9104* 1.0000
81
2011
. pwcorr mepi mpi pov_inc, star (0.05)
mepi mpi pov_inc
mepi 1.0000
mpi 0.4035* 1.0000
pov_inc 0.4079* 0.9308* 1.0000
B.3.2 Spearman Rank Test

2004 . spearman mepi mpi
Number of obs = 21960

Spearman's rho = 0.4328
Test of Ho: mepi and mpi are independent

Prob > |t| = 0.0000
. spearman mepi pov_inc

Test of Ho: mepi and pov_inc are independent

Prob > |t| = 0.0000
2011
. spearman mepi mpi


Prob > |t| = 0.0000
. spearman mepi pov_inc


Prob > |t| = 0.0000
82
B.3.3 Kendall Rank Test
2004
. ktau mepi mpi

Kendall's tau-a = 0.2854
Kendall's tau-b = 0.3286
Kendall's score = 68822394
SE of score = 1053548.830 (corrected for ties)

Prob > |z| = 0.0000 (continuity corrected)
. ktau mepi pov_inc


2011
. ktau mepi mpi


. ktau mepi pov_inc


83
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An Analysis of Energy Poverty in the Philippines

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An Analysis of Energy Poverty in the Philippines

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University of the Philippines Diliman

An Analysis of the Multidimensional Energy Poverty Index:

The Philippine Case

in partial fulfilment of the requirements for

Alyssa Mari G. Catanjal

Trexia Mae D. Lechoncito

Alyssa Mari G. Catanjal and Trexia Mae D. Lechoncito

Keywords: poverty measure, poverty, energy sources, energy

JEL Classification: I32, Q40

us in the pre-stages of this thesis.

receive unauthorized assistance in the completion of this paper.

Alyssa Mari G. Catanjal Trexia Mae D. Lechoncito

provided the proper citation is made.

Alyssa Mari G. Catanjal Trexia Mae D. Lechoncito

CHAPTER 1: Introduction ………………………………………………..…….…..…….…… 1

CHAPTER 2: Trends of Energy Consumption …………………..………….……...………… 4

2.1. Trends of Energy Consumption in the Philippines ………………..……………... 4

CHAPTER 3: Review of Related Literature ………….………..…...….……..........................10

3.1. Definition of Energy Poverty …………………………………………………........10

3.2. Studies on Energy Access and Energy Poverty …………………………………...10

3.2.1. Studies that used Energy Access in the Philippines …………………… 11

3.2.2. Cross-country studies on Energy poverty ……………………………... 12

3.2.3. Empirical Studies using Alkire-Foster (AF) Model in the

3.3. The Role of Energy Access ………………………………………………..…….… 14

CHAPTER 4: Existing Energy poverty metrics …………………………………...……........ 18

CHAPTER 5: Conceptual Framework ……………………………………………………..... 25

CHAPTER 6: Data and Empirical Approach ………………………………………...……... 29

6.1. Data ………………………………………………………………………………... 29

6.2. Summary Statistics ………………………………………….……………………. 30

6.3. Empirical Approach ………………………………………….…………………... 31

6.3.1. Multidimensional Energy Poverty Index (MEPI) ….…………………. 33

CHAPTER 7: Trends, Analysis, and Discussion of Results ………………………………... 39

7.1. Trends of MEPI Indicators …………………………….……………….…...…… 39

7.1.2. By Region ………………………………………………..……………..... 40

7.1.3. By Industry Sector and Gender……………...……….…………..…….. 42

7.2. Results and Discussions ……………………………………….………………….. 42

CHAPTER 8: Conclusion and Policy Implications ……………………...……………………56

A. Tabular Values of Data and Results …………………………….…...…………… 65

B. Stata Runs ………………………………….………………….…...……………… 75

B.1. MEPI Computation …………………………….…………………………75

B.2. Regression Results …………………………………..……………………. 78

B.3. Correlation Tests Results …………...………………..……………...….... 81

Table 2.1. Electricity access in Southeast Asia, 2013 ………………………..……......….…… 7

Alyssa Mari G. Catanjal and Trexia Mae D. Lechoncito

What is the extent of the energy poverty in the Philippines?

Philippines, this problem still persists.

Figure 1.1 Energy consumption per capita in Southeast Asia, 1990-2013

1990 2000 2010 2013

Source: World Development Indicators, World Bank

Source: World Economic Forum

The relationship of energy access to human development has been emphasized by

of poverty in developing countries—highlighting the strong correlation between an increase in

storage, and education.

take into account the multidimensional aspect of energy access.

effectively solve the problem.

2.1. Trends of Energy Consumption in the Philippines

This is also the case in the Philippines.

Figure 2.1 Average energy consumption by sector in the Philippines (1998-2015)

manufacturing mining construction

Source: Philippine Statistics Yearbook, 2009-2016

common household energy sources.

As shown in Figure 2.2, electricity consistently displayed the highest proportion of

government to hasten rural industrialization (NSO-DOE). In contrast, biomass residues posted an